Valmont’s Mike Mauer On How To Nail Your Event Price Strategy And Make It Rain (Guest Post)

Mike Mauer
– Mike Mauer
Valmont

Pricing strategy has fascinated me for a long time now. Determining how much tickets should cost for your event seems so simple, but to do it right is a complicated tapestry that involves evaluating nearly every aspect of your business. Everything you do as a producer – your lineup, your brand, your marketing, your everything – is reflected in how many people buy tickets at what price point.

So why do so many event producers simply get it wrong?  
All too often, I see people fall into the pitfalls of cost-plus pricing. The idea is elegant and the recipe is simple – take your expenses, add in the margin you want to make and divide by the number of expected attendees. A $5 million budget plus a $1 million profit, divided by 25,000 fans, means you should charge $240 per ticket. Bam, you’re done and on to the next thing, right?
Wrong. The obvious issue here is that it starts at the wrong end of the equation. You should never ask the fan to cover the costs of producing the event. Quite the opposite, in fact. Instead, your entire budget should be centered around answering one question – what is the fan willing to pay?
Value-based pricing seeks to find out what fans are truly willing to pay and build a budget around that. If 10,000 fans are willing to spend $210, then your event expenses should cap out at $1.75 million (assuming a 20% profit margin).  
But how do you know what fans are willing to pay? Let’s go down the rabbit hole.
At the heart of every purchase is one ultimate truth – a person chooses to buy a ticket if they believe the value they will receive is worth the cost. This incredibly simple concept, called perceived value, has a profound impact on your ticket price.  
Coachella, for example, has done a spectacular job using its iconic status to develop a high perceived value. It’s no surprise it sells out almost immediately at a relatively expensive price – it’s a bucket-list item for many fans, so it’s worth the cost. Would a brand-new festival that copies Coachella to a T be able to pull off that same price point? No way!  And yet I see this mistake made all the time.
How in the hell do you start figuring out what your event’s perceived value is?  
Comparable Events – This is a great place to start. Look at what these similar events are pricing themselves at, their location, number of days, attendance, core demographics, and how many artists are playing (for music fests). Make sure to match the same lifecycle of your festival (e.g. if you are in your inaugural year, look at their first-year stats). While this is a good start, use caution! Even if a competitor looks successful, you don’t actually know if they made a profit or have a sustainable business model.
The Artist Lineup (For music festivals) – If you are a relatively young music festival, your lineup is going to be the #1 aspect affecting your perceived value. Please don’t go from the gut. Do your research! Look at average ticket price, range of ticket prices, and frequency of plays in the market to start.  
Surveys – There are few better sources of information than simply asking the fans.  Don’t ask about pricing directly, as people tend to push for cheaper options when given the choice. Instead, ask questions that elicit fans to tell you what they value. “Why did you choose to attend the event?” “What was your favorite VIP amenity?” “Would you buy a GA ticket again? Why or why not?”  
Total Final Cost – Understand the true cost of attending your event. For a city festival, a fan has travel, hotels, ride shares and more to pay for before you even get through the gates! Camping festivals have their own set of expenses that take a big bite out of fans’ overall budgets. 
Who is buying what ticket – Each person has a different perceived value of the event, so it’s difficult to generalize one price to satisfy everyone’s needs.  
Instead, seek to understand the different types of groups that might be attending: Who cares just about the core offerings like the lineup? What is the price point they would best react to? 
This is only scratching the surface of hundreds of things you can do to understand the true value of your event. The good news is that by doing all of this, you’ll actually have a fairly good grasp of the other side of the equation – market demand. 
As you plan the event, there are three fundamental goals that should drive your business strategy:
1. Your promotional efforts should focus on maintaining or raising the perceived value. This is where developing a strong brand, a thorough marketing strategy and pricing tactics (like ticket tiering) all come into play.
2. Your ticket should be priced at or below the perceived value. One popular strategy here is to lower the price by subsidizing your budget through sponsorship and/or concession revenue. Free events do this all the time – they still have a perceived value, but offer free entry since their business model relies on other revenue streams. 

Pitbull
Adam Bielawski
– Pitbull
makes it rain June 8 during the Nickelodeon Slime Fest at Huntington Bank Pavilion at Northerly Island in Chicago.
3. Your festival’s costs should be below your expected revenue. This is your profit margin. While this may seem obvious, it’s important that you build the budget only after you’ve established the right price point, not the other way around.
It’s a massive effort, but if you commit the time, energy and focus to building out a value-based pricing model, your event already has a massive head start in being successful.  

The rest of the core decisions are easy to make because they are all grounded around the only thing that matters in producing an event: What the fan truly values. 
Mike Mauer has been involved in all angles of live event marketing and ticketing for nearly a decade. He is currently the co-founder of Valmont, a collective of award-winning festival producers, offering executive-level consulting, strategies and tactics to events nationwide. Read more event marketing and ticketing tips on his blog at GoForMike.com and check out Valmont.io.

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