The first in a three-part pricing series, this article examines myriad essential pricing considerations for meetings and events.
Let’s face it: Between the economy, scandals and competition from free online communities, meeting professionals have had a tough time as of late. While several systems conditions have changed, we continue to rely on traditional pricing models, even though these are not as effective as they once were. In fact, the most frequently used pricing strategies tend to restrict our ability to be responsive to the marketplace. Some of these common strategies include the following.
- Break-even pricing. This type of pricing, and its cousin cost-plus pricing (adding a set profit to the break-even calculation), are effective for covering most costs, but they often overlook elements such as planning time and overhead for the organization, so may underestimate the full costs of producing an event.
- Anchored pricing. In this case, meeting professionals can get trapped by what has always been charged in the past, or by what competitors are charging. If organizers opt to do a price freeze one year, it becomes very difficult to catch up again in the future. Also, competitors will match discounts more readily than increases, creating a race for the bottom.
The biggest challenge to both of these strategies is that they fail to recognize what the event is worth to the participants. They also only look at a very small part of the Total Cost of Attendance (TCA) of events.
Increasing Attendance and Profit
Meetings and events are about much more than profit. They are also about extending the reach and mission of the organization, typically through education, networking and/or fostering innovation. As such, pricing strategies must take into account not only how to maximize profit, but also how to maximize engagement and attendance.
To achieve these goals, meeting professionals need to offer exceptional events with exceptional value. This involves looking at the pricing elements that are within your control and other elements of the TCA that are simply within your sphere of influence. Examples of these elements are the following.
1. Selecting event locations with a range of accommodation price options.
2. Informing stakeholders about seat sales and other cost savings.
3. Negotiating public transit passes for attendees, reducing travel costs and improving the event carbon footprint.
4. Providing affordable onsite childcare services.
All of these help contribute to general affordability of meetings and events beyond registration fees. They also signal to potential attendees that you’re committed to making their attendance possible.
Reducing Financial Risk
Even when events are profitable, meeting and event professionals may have issues related to cash flow and uncertainty about expected attendance. If most registration revenue doesn’t come in until a few weeks before the event, meeting professionals could be unable to pay deposits. Uncertainty about expected attendance can also lead to difficulty in securing sponsors or exhibitors who want to be confident that registration targets will be met. Finally, it also means that event organizers don’t have access to high-quality information to make important decisions, such as modifications to room blocks. Urging delegates to register and properly collaborating with partners are two key ways in which planners can enhance cash flow earlier in the process.
The secret weapon for bringing in revenues earlier is to ensure the event experience starts when people register, not when they arrive at the event. Not only does this provide financial security, it increases engagement with your participants. Consider adding elements such as a pre-conference networking component, the ability to help select speakers, opportunities to co-create sessions and even special challenges as part of an event game-based strategy. (The second article in this series will explore additional pricing strategies, including alternatives to early bird pricing, to increase this sense of urgency.)
In an effort to enhance collaboration between planners and their partners, particularly venues and hotels, consider these four possibilities.
1. Align registration and deposit milestones to match one another so that quality information is available with sufficient time to respond.
2. Match discount types (students, members, etc.) to encourage staying within the room block.
3. Minimize “free rider” and attrition risks by not linking costs of meeting space to room block pickup. This generally results in lower hotel rates, increasing pickup, and it distributes the cost of the meeting space to all attendees, including locals and those staying off property.
Increase Confidence in the Organization, the Event and the Industry
From the AIG effect to Muffingate to the more recent GSA scandal, it’s safe to say that there is intense scrutiny on our industry when it comes to pricing. As an industry, we have a responsibility to ensure transparency in what we charge.
To that end, there are valuable strategies that can help increase confidence in the organization, event and industry.
- Redesign budgets to align with strategy. I recommend starting every budget from scratch. Ask yourself if every item contributes to the mission, and if it is something delegates value enough to pay more for as part of the registration fee. If not, eliminate it from the budget. If it is something that is valued, ask yourself what it is worth to your delegates, as opposed to what it costs you to produce.
- Deliver on the pricing promise. When we put a price on something, we are telling the world that it is worth that amount. Make sure that you deliver on that promise. We also need to keep in mind the importance of earning the public’s trust, and we can do this by being responsible in our event design.
Be Resilient Under Any Economic Condition
The true test of resilience: Would your attendees pay out of their own pockets to attend your event? While we know that meetings and events are major economic contributors, we also recognize that they are vulnerable to economic conditions. In recent years, exceptional research studies have been able to quantify the value of the meeting industry in Canada, Mexico and the U.S.
Recognizing the symbiotic relationship between the meeting industry and the economy means there’s a responsibility to adapt events to greater resilience. We can do this through a variety of means.
- Design events so that demand increases in tough economic times. Economists refer to products as being “inferior” when the demand increases during times in which income is constricted. In our current situation, this doesn’t mean planning bad meetings, it means introducing elements such as job fairs, solution centers and ways for participants to improve their organizations with a positive short-term ROI and, importantly, sustainable long-term ROI.
- Add a hybrid or convertible hybrid element to your meeting. Hybrid meetings help reduce dependence on travel, increase affordability and engage a broader range of attendees. They can, however, be costly to produce and tend to have late registrations. To ensure that you have sufficient participation to make it worthwhile, consider having a “tipping point” minimum registration number that you can promote through social media and ask your community to help you reach that point by a target date. You can also introduce a convertible hybrid registration category that allows early birds to switch their hybrid registration to a live registration at the early-bird rate up to the point where you need to guarantee your variable expenses.
The Future of Pricing
Public pressure for transparency, the need for meetings to be successful and technological developments with registration systems are all driving the transformation of pricing strategies. In the coming years, we’ll see greater emphasis on dynamic pricing for all components of the TCA. I also expect that we’ll see a shift to better collaboration between planners and suppliers and a refocus on the basics: ethics, influence and outcomes for meetings and events. One+
business of meetings,
One+ July 2012,
value of meetings