11. Strategic Pricing with Athletic Events
There is a science to setting your event pricing. Prepare to be schooled.
Oftentimes when race directors think of pricing strategy, they narrow their thoughts to one statement:
“What are my competitors charging because I can’t be higher”
Unfortunately, that’s not an effective strategy. We’ve seen time and again that the top three reasons people register for a race are:
The DISTANCE of the event, relevant to how far they want to run
The LOCATION of the event relevant to where they want to travel
The DATE of the event, relevant to…well… their availability
If races in the same market have price differences of, say, $5 or $10 for short distances, and even $40+ for longer distances, such differences don’t have a meaningful impact on the number of registrants. In fact, the most popular events are often the most highly priced.
The 5 Elements of an Effective Pricing Strategy
Pricing isn't about throwing a dart at a dartboard. I mean, you can take that approach if you really want, but it's not, strategically speaking, the best. Instead, coming up with pricing should be focused on analyzing all the elements that go into a purchase decision, and then leveraging those elements to maximize your revenue.
A proper pricing strategy focuses on FIVE important elements:
Historic pricing for an event, including price changes
Historic consumer behavior in response to those prices
Registration trends across the industry
Local and other factors that impact registration, such as weather, other events, holidays, etc.
As a result, strategic pricing leverages both data analytics as well as social/emotional insight.
I bet when you started your job you didn't realize that you needed degrees in data analytics, sociology and psychology just to come up with a 5k entry fee, didya?
In truth it's not that difficult. But it does require a breadth of knowledge and a little time.
The Goal of a Pricing Strategy
Believe it or not, the goal of a pricing strategy is to create panic.
Panic is good.
The more you get people to feel like they have to act right now, the more likely they are to think more often about registering, and the more likely they are to talk to their friends more often about registering.
If, for instance, I feel that there is no rush to register, I am more likely to be complacent, possibly forget about the event and come up with excuses why I can’t do it. On the other hand, if I feel nervous that I’m going to miss out on something special, if I feel a sense of panic, then I’m more likely to be thinking about the event very regularly, and more likely to tell my friends to think about it too so that we can act quickly.
It’s not about lowering - or even increasing - your pricing.
In every pricing strategy we do at imATHLETE, the objective is to increase revenue without lowering or raising prices. After that, if you want to increase prices, feel free.
Knowing the basics of human behavior, there are tricks and strategies that can be implemented to create panic and drive registrations.
For instance, if you email all previous participants two days prior to opening, and give them a special lower priced opportunity to register before everyone else, they feel special. Now, this is not implying you’re giving them a discount, nor is it saying it’s lower priced than last year. It’s just lower than the next pricing level. Heck, you can even raise the price, and give them a discount code so that they feel like they are getting a deal when in actuality they are just getting the regular price.
Pricing Strategies Work
Every pricing strategy we’ve done for any client has *always* resulted in increased revenue. In fact, there was one event that, due to operational circumstances, registered less participants the year we did the pricing strategy, and they *still* generated more revenue than the previous year.
Most recently, the Christie Clinic Illinois Marathon blew away their historic numbers.
In the past years, they rarely exceeded 300 registrations in the first month and 1,500 registrations in the first two months.
This year they experienced a whopping 654% year-over-year increase in both revenue and registrations. Instead of 1,500 registrations in the first two months, they received nearly 2,000 registrations in the first two weeks!
As Jan Seeley, co-race director for Illinois Marathon has said, “imATHLETE has demonstrated that new opportunities can be found through sound analysis, creative thinking, and a deep understanding of registrants’ behavior.”