Wednesday, March 12, 2014

The Pricing Game #1: Low Prices Are So Passe

If you are a person who signs up for endurance events and not one who actually puts them on, you may not want to hear this.  Earmuffs.  If you are a race director, here is a very important tip for you... there are simple ways you can make more money from your participants. Potentially a lot more money. In some cases, hundreds of thousands of incremental dollars year over year. 

It all comes down to basic buying trends.

I will be writing a few entries scattered here and about with pricing strategy tips.  I'm not going to put them all in one post because, Lord knows, I don't want to piss off participants too much.

But today let's talk about Pricing Strategy #1: LOW PRICES ARE SO PASSE

We see a lot of events out there who pride themselves on being very low priced.  I'm talking about a 10k for $20 or a 5k for $15.  I hear race directors saying that it's critical to their business that they remain inexpensive.  Well, I hate to be the bearer of bad news, but you're wrong (at least in many cases you are).

Event directors used to be concerned with how low their entry price needs to be.  They would compare their event price to their competitors and try to pinch their pennies in order to be the lowest out there.  The results of that is just a mad dash to who can lose the most money first.

But times have caused a dramatic shift.  Now, instead of a focus on how low they should make their prices, event directors are focusing on basic business fundamentals and trying to see how *high* they can make prices without effecting participation levels. 

I ran about ten 5ks/10ks over the past year and do you know what each of them cost? You don't? Well guess what, neither do I.  Even if you forcibly made me stand outside naked in Minneapolis in January eating an ice cream sandwich, I couldn't tell you which one was the least expensive and which was the most.  I have absolutely no clue.

An important thing to note here is that I'm a cheapskate. Its in my nature. I like saving a penny whenever possible and get frustrated when I have to spend more. I will still drive 10 minutes further to save $1.49 on a dozen eggs - I'm that type of penny pincher.  When I pay too much for something I take it personally and I remember it. But the last thing I remember in a running event experience is the price because, frankly, in the end it doesn't matter.

And herein lies one of my key points: The popularity of an event is not at all proportional to the amount it costs.  In fact, the most popular events are often the ones that cost the most money.

I know what you're saying. You're saying "the popular events charge so much because they can. They are so popular that participants will sign up regardless." Well, my disbelieving friend, that's bull hockey.
Or mostly bull hockey.  One reason they charge so much is because they put on quality experiences.  Not only do quality experiences cost money but people will pay more for quality experiences.  

The largest 5k/10k event in Los Angeles charges up to $50 for the 5k. That's $16 per mile.  Absurd? Well, nobody balks at the price. In fact they continue to get more and more participants every year.  Why? Because they give an amazing shirt to all participants every year, and because they put on a fun race.  If they charged $30, it would be a far less exciting experience because they just wouldn't have the money to create the experience.

So if you're an event organizer, don't fall victim to feeling like you need to be the cheapest around.  You don't.  Forget the low end of pricing and focus on what you can do to create a kick butt experience, then determine how much that costs.

And don't be scared... Raising your prices isn't a bad thing as long as you're giving the participant the value for the dollar spent.

Next up: Procrastinators And Their Wallets

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