This post was prompted by my desire to practice open inclusive working and an interesting discussion on Cliqmunities and the pricing of events over at David Goddin’s place.
We ran this year’s Stop Doing Dumb Things event and charged our guests £119 +VAT. That price was a ‘think of a number’, intuitive guess in the dark, so we now have a conundrum that you may be able to help us with, please.
The event generated revenue of about £6,000 and produced a surplus of about £1,600, though we didn’t pay any people for organising it. Bearing in mind the financial risk, we think that is OK for such an event (first time around). And we’d like to do a bit better next time and make it a better event too (e.g. provide a sound system, etc), and keep challenging the established market place (well you’d expect nothing less eh?!).
So here’s a question: “What do you think you/other people/companies would think is really good value that they could decide and sign up to without major hassle of getting board approval etc?” Should value be based on the learning people gain, comparison with other conferences/events, the good feelings people seem to have enjoyed together? We’re tempted to write down some numbers and get your reaction, but on balance, we’d rather just ask for your responses please – and please do include a suggested number or two. It’ll help us focus our thinking for 2012.
Thanks your very much for your consideration. If you feel you’d rather not say, that’s fine too, and please remember next year that we did ask and some will have replied!
Hi Doug, I may be slow off the mark today, so forgive me. I think you’re asking how much could I get away with for paying for an event before questions start to get asked about value for money?
I think £299 is the top end. Your charge at £119 seems reasonable enough. That’s about as good a stab in the dark as I can muster. Hope this is what you were seeking.
Splendid reply Sukh! I’m fine with questions getting asked – they’ve been the lifeblood of this experiment and we’re learning how to listen to the questions and think of useful answers. Your stab in the dark has brought light – I’m grateful as always.
Cheers – Doug
Doug,
Thanks for being open about the finances. I guess that your breakeven point was about 50 people so the profit’s reasonable. Did you have a maximum attendance in mind? Given the positive response to this experience the June event is likely to be very popular which may inhibit the quality of the conversations.
I chose to attend personally and not have it paid for by my company. The price was OK on those terms.
From a corporate perspective their question could be “what is the company getting for the money?” If it’s a learning event, what’s the content? If it’s a networking event, why is the company paying? I feel that the event falls between the two so a clearer message would help me to get my company to pay for the next one.
£100 – £200 (inc VAT) would seem a reasonable range if I pay for myself.
£150 – £300 (ex VAT) would be acceptable for a company paying the bill.
I’m not clear what you’d spend the extra money on (other than extra heating) as the venue, food etc. were a perfect match for the event.
Thanks for asking.
Mark
Hello Mark and thanks for such useful feedback.
We are conscious that we don’t want the next event to be too big, it’s great that you have raised this point. Assuming we hold it at the same venue, and that is our preference, then my guess is we may be able to accommodate up to another fifteen people. And we would think carefully about method for the day so that as groups form they are kept small enough for conversation to flow well, a very good point indeed.
Yes clearer messages are useful and I think we can manage that in part because we now have a successful event to reference.
Your guidance on pricing is most helpful. Some things we may spend extra money on could be a couple of mics so people’s feedback can be gathered and heard more easily. I felt I had to raise my voice a lot and I’d prefer to speak in softer tone. We have some ideas about some more participative things we can do which may involve hiring/buying additional materials. We’d quite like to see how we, all of us, can co-create something for people to take away on the day, and at the same time we’re unsure what that might be at the moment. We will experience increases in general costs which we’d like to cover and we might like to get some help with the administration too.
Thanks for your thoughts – I hope my reply is helpful?
Cheers – Doug
Doug,
Yes your reply is helpful.
Another thought for the pot:
Would a self selected discounted price work? I’m thinking that those who attend from, for example, charities could choose to pay the lower rate whilst corporates would be expected to pay the higher rate.
Like the “pay what you think it’s worth” argument there’s a degree of trust in offering this and that trust is in the spirit of the event.
Mark
I like the sound of that, thanks Mark
I think there is often an unconscious relationship with our day rate… someone on £75k has a day rate of approx £350. Price below this and I think the decision becomes easier for them to make/justify.
The question becomes, who do you want to attract (inclusivity) and what do they require in terms of environment/agenda (cost)? The person working for a charity on half the above rate needs to “justify” twice as much relative to their day rate…
It’s big and bold, but could you consider asking attendees to make that decision themselves? Guide them as to a % of salary perhaps but put yourself in the hands of the audience?
Hello David – thanks ever so much for this. One man’s day rate is perhaps another man’s lunch tab eh 🙂
We will indeed have a think about this % idea. We are keen to make pricing simple, perhaps that means trying to land a figure, perhaps not. It may be simpler for a consultant type role to work with this concept than someone employed in a larger company?
Useful and challenging food for thought thanks.
Doug
Open source financing has several problems attached:
Cheap is perceived as of limited value by some (even if it is not)
Just look at what happened when Radiohead said ‘Pay what you want for our record” – the mean price was about £1.38 per album. The public love the idea of free, but don’t really equate that with value.
With some important exceptions, everytime I have done something at a budget price or free, it has not created an expectation of value. The exceptions ARE important, but sadly the general rule applies. I decided to stop offering such things to companies last year and decided to give any free time away via books and blogging, which has been more successful in terms of what I hope to achieve.
All depends what you personally want to get out of it and life in general – ooh, that’s a big question – What do you want from life? Reminds me of The Tubes…
http://www.youtube.com/watch?v=Fgjfi1DU1mQ
Saludos!
Peter
Saludos indeed Peter. This is great stuff thanks and very interesting. I wonder what drove the price so low in your Radiohead example? Maybe people thought they didn’t need the money? I don’t know, and it is a powerful lesson.
I’m not drawn to free for precisely the reason you say, it creates a disconnect from the expectation of value.
Kudos for the Tubes link – wahoooo!
Cheers – Doug
Free doesn’t always mean cheap and Radiohead may have only got £1.38 per copy but they probably don’t need the money .. and the CD sold over 3 million copies in the first year.
As for the costing for this event it would depend on, among other things, whether you want to pay everybody/anybody, make money or just repeat last years result.
(My OCD want’s to know why £119 and not £120 or do you think that people still think that £119 looks more like £110 but anyway..)
I suggest £150 which can either be £125 +vat or £150 (+vat).
This is assuming vat @20%
Excuse my ignorance but why does this have vat anyway or is this tax now applied to almost everything unless you’re a banker.
Regards
Alan
Thanks Alan. Yep – we went for £119 because…..folks do that kind of thing. Honestly at that price point I don’t think it made any difference though if I were thinking of charging around £200 for something I may think say £189 looks a lot better? I don’t know – it is one of life’s befuddlements I guess.
My company is registered for VAT and so I have to charge it. Thanks so much for coming by and having your say it’s helpful.
The Radiohead example is interesting – in a distant past I worked in Royalties for Warner Music! Radiohead may only have been getting a £2-3 at most for each CD anyway (top end assumption) and that income would come to them with varying degrees of delay. What they achieved might be seen as reduced income (a failed experiment even) but some great commercial learning and client engagement has come from it.
Take a look at this comScore report for a bit more info – http://bit.ly/vTKe8j
The intelligence on freeloaders, true fans and the average price a true fan will pay ($6) seems worth it on balance. Perhaps there is a model to adopt there after all even if only experimentally?
To steal and rephrase Peters comment, the public love the idea of free and your true fans will equate that with value!
This is interesting stuff thanks David. Me and my associates have a lot to think through and this experimental model is interesting, and I feel I have to weigh it against a considerable level of fixed costs. Much scratching of heads to be done eh. Thanks – D
Hi Doug
Sorry I missed your event this year. Don’t let that happen again 🙂
This is the ‘piece of string’ question. Delegates really have very little knowledge of the costs involved in setting up and running events. It is not just the venue (where costs vary wildly – is there WiFi? How is the food? How much for all the AV? Who pays for someone at reception? etc etc etc).
Profit – this should not be a ‘dirty word’ I had a discusion once with a colleague who also ran a very large talent event – and we agreed that if we really looked at how much we made, when figuring in our long hours in organising etc that we make about £1.36 an hour. So some might look at your stated profit and think – Wow, that looks good. l look at it and think ‘how much could Doug have made in his day job of consulting with companies if he hadn’t put in weeks of work on the event. (actually, I don’t really think that, as I love putting on events and ensuring that we are sharing knowledge!!)
It is great that you are sharing the debate with your potential audience. Ultimately, IMHO, it has to come down to two things:
1 Am I running an event as a commercial exercise? (which means you determine your pricing model according to your required profit margin)
2 Am I running the event as an opportunity to share learning and knowledge, perhaps generate a couple of business leads? (generally make enough money to pay whomever and whatever I need to hold the event.)
£119.99 sounds fine to me – The VAT issue is a pain, but not our fault 🙂
Looking forwar to the next SDDT outing.
Cheers
Al
Hi Al – promise I’ll shout louder about the next event on 27 June 2012 🙂
I agree folks have little idea on costs hence our decision to share the info. We chose to run this event as a knowledge share and meeting new people day and we hoped our fixed costs would be covered. Except for paying for all the admin etc we achieved that. Truth is that there was a lot of time invested which you could argue prevented doing other paid work. And you have to experiment so this plan was executed with this situation in mind.
Number 2 feels more like where we’re going for this project.
Al I’m hugely grateful for your input as I know you have a lot of experience in this field. Cheers – Doug
Everyone has focused on price but to me the value comes from what the individual gains – whether it is extending their personal and business network, having their mind stretched in a different way (which can help them solve an on going problem or approach a piece of work differently), being refreshed and invigorated by the company – or just, dare I say it, having fun. We all work better and are more productive when we have fun but not all companies see it that way.
In terms of price it depends on the audience you want to attract. Somewhere between £100 and £150 is good for me as a one man band and I know that in my previous role I could have justified spending that. I’d have had more difficulty at £250.
Thanks Sarah – you are spot on about what people gain as a mark of the value. Fun is indeed a part of good work and I hope to make it more so in coming years.
In this instance we asked people to think about value based on openness around out costs incurred and asked specifically that people give us a steer on that.
Thanks for your input, it’s very useful. D
May be too late for this thread but for what it is worth and at risking of repetition from those less tardy than me above!
1. Pay what you think it is worth. The Radiohead discussion above is spot-on. For them, it was a little less than they would have got anyway so all they did was an experiment. Always intersting to know whether they would have sold 1m @ £2 royalty or 10m @ £1.38 but that’s price elasticity for you – they will know next time!!
2. I don’t think (1) is for you but perhaps a guide price might work? Critical to this is your agenda, feedback, testimonials etc etc as you have to generate a high-value construct that people can evaluate and apply their own value to. Some will give you the guide price, others will perceive a higher value (such as this year’s attendees!) and pay an accordingly higher rate.
3. Price elasticity. So do you want 50 people@£120 or 70 people@£100. It’s a tight balance and actually you dont have enough data yet to do anything too scientific but the last thing you want for an event of this construct is too few people!!
4. Early Bird discounts ……… my favourite ……… Set your rate and then discount until a certain date. So, set at £300 with a 50% discount for 2 weeks, then a 25% discount for 2 weeks, then a 10% discount for 2 weeks and see what the take up is. If you are getting the volume of attendees you want, just stick with that price.
5. Gut feel – well you didn’t do too bad this year so who says you weren’t right? Personally, I think £119+VAT is extremely good value for what the feedback and Twitter feed said was a good and valuable day for many. If you went £149 (of £150 for the OCDs) that wouldn’t go too far wrong.
That’ll do for now 😉
Cheers
Chris
You are most definitely not too late. Your thoughts and ideas are extremely valuable and any repetition simply adds depth in places. This is great thanks Chris, really useful.