Pricing Your Event to Maximize Revenue
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Pricing is an important piece of the revenue maximization puzzle. Up to a point, the lower you price the seminar, the more people will attend. Where’s that point? You may be tired of hearing the answer by now, but it stays the same: test your market! One thing we do know: a free seminar will always be perceived as a sales pitch even though you don’t intend it to be one.
This will give you more opportunities to sell your products. Right? Maybe! When you price the seminar too low you might attract attendees who can’t afford to buy your products.
If you price the seminar too high you won’t attract enough people who might buy your products. What’s the answer? Test!
In my tests of a number of my markets I have found the $297 price to be the right one for a one-day seminar. Please don’t take this number and simply assume it will work for you. It may. It may not. Test!
The way I determine the right price is by computing the total number of dollars that come in from the seminar as a result of a given price. I found that at $99 for that same seminar people didn’t buy much product. They also were pains in the ass to deal with. Very little consulting business resulted. This was obviously not the right price.
I then tried $495. I got a lot fewer people at the seminar. They didn’t buy all that much more product than the group who paid $99. Some of the people became consulting clients. Price optimization for me in this particular market occurs at $297. It seems to give me the best of everything.
The only way for you to find out what price is right for you is to test for yourself. Call me to discuss what price you may want to start at.
The more specific your seminar, the higher the prices you can charge. If I’m doing a generic marketing seminar for small business people I might be able to charge $100. If I’m doing a marketing seminar for caterers or self storage operators, I can easily charge $300 for a oneday marketing seminar customized to that niche.
How you price your seminars is a very important factor in determining your overall profitability. But if your goal is the maximization of revenue, you need to need to consider revenue generated from seminar registration as just one of the components. Remembering the formula: TR = SR + PS + CB you can see that seminar registration is just one of the three components in computing total revenue. If you look at CB (consulting business) as gravy, then you only have two components to consider.
Let’s look at three possible prices for a seminar. Let’s take a one-day seminar and price it at $497. Assuming this is a market that normally expects to pay between $200 and $300 for a one-day seminar we are quite a bit on the high side.
You might expect to get fewer registrations at this price point. If we take consulting business off the table, let’s look at product sales. Clearly, people who are willing to pay $497 for a one day event are eminently qualified to buy our products. Here’s the problem. Although they are qualified, there will probably be fewer people in the room.
With fewer people in the room there will be less of a “feeding frenzy” when you make your product offer. As a result, the mob mentality will be reduced and by virtue of this fact alone, you may not close as many sales.
Also, people who paid that amount may be reluctant to shell out additional dollars to buy products, feeling that they have spent all they should for this event.
Let’s jump to the other side of the pricing equation. Let’s say you charged $97. You would get a lot more people to register. If we once again take CB off the table, let’s explore what might happen to PS. Since there are more people, we may get more sales. However, since the entry price is so low, this group might be the type who are reluctant to spend any money at all for product sales.
At this $97 price point, if we could get a few people to buy, it might create a buying frenzy and that would be good.
At the mid-point price of $297, we might maximize the total registration dollars and also have a group who would be willing to buy products. Given that the price was low enough, there might also be enough people to create a “minor” frenzy. Overall, this mid-point price might maximize TR.
All the above being said, there is only one way to know what price to charge for your events – test! If you don’t test, you’ll never know. Testing will make it easy for you to optimize your price because you’ll be dealing in reality rather than fantasy.
From the above discussion do not assume I am suggesting you price your one day seminars at or around $300. I don’t know what will work for you and wouldn’t hazard a guess! You don’t know what price optimization would be until you test. When you test, make sure to include only TR & PS in your computation.
I would speculate that the higher-priced registrants, everything else being equal, would be more likely to buy your consulting services. But this is purely speculation. The only way to find out for certain is to test. The problem with testing is that you will not get any immediate results as it relates to the CB component.
From experience, I can tell you that if you compared the low, medium and high price points for a seminar, you would probably find that those who paid the low registration fee would be much less likely to give you consulting business. That has been my experience over time. Your mileage may vary.
Whichever price point you choose, give people an incentive for early enrollment. My experience – and again you need to test your markets to see if this experience has value for you – is that if I give people a 10% discount for registering more than 2 weeks before the event, it increases sales without reducing revenue appreciably and takes away some of the stomach-wrenching fear of a seminar failing.
Some seminar promoters use a two-step seminar promotion method. This is where they offer a free seminar and heavily promote it. They use this free event to sell people into a higher-priced weekend seminar the following weekend. This has been very effective in the real estate market and in some others I have both heard and seen.
Again, testing is the only way to know what works. If you’re a good salesperson for your seminar, this can be a highly effective way of doing things.