Event Pricing

Published 18 years, 7 months past

Reading over the survey feedback from our AEA attendees, it seems that most people felt they got good value for their money.  That makes me feel a whole lot better, because figuring out how much to charge was one of the hardest parts of launching AEA.  We did have a few people say they thought the price was too steep, but in all honesty that’s a good sign.  Give me a few minutes and I’ll try to explain why.

There are two ways to look at pricing a seminar.  The first is to ask what makes it worth your while, financially, and then do some fairly simple math.  The second is a pure market-forces equation.  The first one is actually quite a bit more complicated, although the second is harder to find.

How do you figure the worth of a seminar—not to the attendees, who can always fill out an evaluation form to let you know, but to those who are organizing and presenting?  I mean, in a perfect world, seminars and workshops would be free to anyone interested enough to show up.  That’s hardly realistic, though, unless you can find a venue that’s willing to not charge anything for a day-long use of their facilities, the speakers and organizers are happy not being paid anything at all, and nobody minds having to bring their own food and drink.

So let’s take it as a given that putting on an event will cost something, and that those costs should be covered.  Suppose, just for the moment, that you find a venue where use of the facilities plus catering costs $5,000.  If you can get 100 people to show up, then you have to charge $50 per attendee to cover your venue expenses.  Since it makes the math so easy, let’s just go with 100 people as our attendance figure.

Assume another $2,500 in miscellaneous event-related expenses—marketing the event, badges, renting an LCD projector and screen, and so on: another $25 per head.  You might also expect that someone’s going to put in a few days at handling registrations, answering e-mailed questions from prospective attendees, and so on.  Factor in another few days of actually finding a venue; they don’t just fall out of the sky, after all.  So let’s call all of that $5,000 in administrative time that will have to be covered.  $50 more per head.  We’re up to $125 per attendee, and remember, that’s still without turning a single dime of profit.  (And, in all honesty, I’ve pretty seriously lowballed these figures.)

Just to keep things simple, we’ll further suppose that all the speakers are local, and so incur no travel costs.  Even so, you’ll be asking each speaker to give up a day of his time to attend and present.  That’s a loss of billable hours, and while our hypothetical speakers have agreed not to be recompensed in the manner of kings, they didn’t agree to run a deficit.  We should at least cover the time they invest.

At that rate, though, we have to consider that each speaker is investing the day to speak plus another three to five days of preparation (remember, this is a seminar, not a three-day conference where everyone gets 55 minutes to run through a slide deck).  Let’s just assume that each speaker puts in a total of a week in preparation and presentation.  That’s five days, and if we assume our speakers could bill $1,000 a day to clients (which is $125 per hour; not too unreasonable for people highly regarded enough to be speaking), that’s $5,000 each.

So if we have two speakers, that’s $10,000 in invested time costs that will need to be recovered, which is $100 per attendee if we fill 100 seats.  We’re now up to $275 a head, which will cover our current total costs and reimbursements of $27,500—assuming we have no more costs than those I’ve outlined and no profit is to be made.

Okay.  So what if the organizers would actually like to turn a profit?  Keep adding.  Let’s say the whole thing is run by a single guy, and he’d like to make a few grand for his efforts.  With 100 attendees, he’ll make $1,000 for every $10 he raises the fee above what covers his costs.  So if we set the price at $300, the organizer makes $2,500.  Go to $350, and he makes $7,500.  Five hundred per head will earn him $22,500, which is, let’s be honest, a very nice payout.

But maybe he has a couple of partners in the mix.  Divide the $22,500 three ways, and each person walks away with $7,500.  Not too bad, although not something you can make your sole source of income unless you’re doing a seminar no less than every other month and you live in a region with a vaguely sane cost of living.  Those living in expensive urban settings would have to do one event per month to stay afloat.

Now here’s the real kicker: what if the seminar doesn’t sell 100 seats?  What if it’s only 75 seats, or 66, or 50?  Remember, the price has to be set before the first seat is sold.  It’s not reasonable to sell seats where the price is “what it costs divided by the number of people who show up”.  It would be really great for the organizers, but it isn’t realistic.  Would you agree to pay for a seminar when you had no idea how much it would cost you?  Because if it costs $27,500 to put on the event and ten people register, then each one of them is on the hook for $2,750.  When those ten people all cancel due to the high cost, then the organizers are left holding a very heavy bag.

So: let’s say we’re being cautiously optimistic, and assume that 60 people will actually register.  $27,500 divided by 60 is $458.33 (and a third of a cent).  So let’s round that up to $500 per seat.  That way, if 60 people do register, $30,000 will be brought in, thus netting a profit of $2,500.  In which case, let’s hope there’s just the one organizer, instead of a triumvirate, or else they’re all looking at a darned small payday.  Even a solo organizer is going to wonder if the $2,500 was worth the effort.

On the other hand, if 100 people do register, then a fairly large profit is made.  The speakers could actually be paid something beyond compensation for the time they invested, for example.  Alternatively, maybe really nice swag could be given to all the attendees, or maybe the lunch gets upgraded to a really nice meal.  There are a lot of possibilities there.

Now’s a good time to point out that a lot of the costs I put into this little scenario are actually low.  $5,000 for venue and catering?  Yeah, right.  Maybe if you skip morning and afternoon coffee breaks and just get a lunch, and it’s one of those “pre-made cardboard boxed lunches with the dry turkey on dry wheat bread with a bag of Fritos®” kind of lunches.  I mean, you probably wouldn’t believe what a hotel or conference center charges for a bottle of water if I showed you the receipt.

(And don’t even get me started on what some places want to charge for internet access; $300 per MAC address is not uncommon.  I wish to God I were making that up.  Fortunately, there are also many places that have a clue and either charge a small flat fee for access, or else build said flat fee into the room rental fee.)

So you can see why pricing a seminar gets complicated.  Once you add up all the estimated costs, which you have to hope you got even vaguely close to correct, you have to gamble on your registration numbers.  It always makes more sense to plan for higher-than-expected expenses and lower-than-expected registration numbers, because otherwise you risk losing money on the deal.

And yes, it’s true that landing a corporate sponsor can help out with covering the costs, but that assumes you get a sponsor who’s actually coughing up cash—some of them contribute goods or services instead of actual money.  This is, of course, why most large conferences have enough sponsors to make a NASCAR team blush.  I can’t even imagine what it costs to rent most or all of a convention center for a week, like they do for SXSW.

So anyway, that’s the first way to price.  The second way, as I say, is a pure exercise in market forces: the cost of a seminar (as with anything else) should be as high as people are willing to pay, but not so high that you fail to sell all the available product.  If you can just barely manage to sell all 100 seats at your event for $1,278 each, then that’s what the cost should be.

The problem is that you can’t sell a seminar that way, either.  At best, you can run the same seminar over and over again, raising the price each time until you have an event where you don’t quite sell all the seats.  Then you drop back the price for the next event, and keep it there for a while before raising the price again.  That only works if you have a market large enough to support continual repeats of the seminar, of course; and if every event has different content, then you’re really just guessing each time.  Maybe this month’s seminar will sell out in three days, and next month’s will only sell half the seats… which, in a pure-market sense, means that this month’s seminar should be priced four or five times as much as next month’s.

You might think that there’s a more scientific way to figure out pricing, but if there is, I haven’t heard about it.  Every time I talk with other people who are putting on events, when we ask each other about how we arrived at our pricing, the answer generally boils down to “I ran some numbers, looked at what similar events cost, and then went on a gut feeling”.

I’ve occasionally toyed with the general concept of a modified auction system, but don’t quite see how it could work—it seems like you’d either underprice or overprice the seats.  Not that I’ve simulated this or anything.  It’s just a thought experiment I’ve tried a few times in my spare hours (usually when trying to fall asleep).

If you have ideas on how to better determine event pricing, I’d love to hear them.  If they’re really good, I might present them (with full credit, of course) when I appear on the SXSW panel “How to Roll Your Own Web Conference” this coming March.

Comments (27)

  1. It is a tough balance. I’m in the middle of organizing my first conference now, and I’ve found it useful to do a budget for a low, likely and high attendance. Some costs are fixed — like speaker fees and expenses, but others are variable based on number of attendees (like catering costs, swag).

    Because the conference I’m working on is for a non-profit, they’re just hoping to break even, not turn a profit. That’s a nice luxury that most organizers don’t have.

  2. If you have a venue with reliable broadband, what about adding the ability to have “virtual attendees” who can pay a smaller fee and see the presentation over the Internet? That could be a way to add some more revenue by opening up to a broader audience. Of course, that just complicated pricing, doesn’t it?

  3. Well that was quite interesting to read. Now I get at least an idea of why these seminars are that expensive. (at least for me, I go to university)

  4. Money, money, money… Money everywhere! It makes me sick…

  5. I have to agree with #3 in that sometimes I so desperately want to go to these events but so often they are priced out of my range. I’m not a student anymore, but I do work for a university and budgets for things like this are well, tight would be a good word, but non-existent would be better.

    The last 3-day conference I went to cost $2100, add in another $400 for airfare, $60 a day for food and for three days I just spent a good chunk of change (almost $3000) which makes it hard to justify the expense.

    So this is why the virtual attendee idea (although probably very difficult to work out logistically and still keep it profitable), or video podcast is so appealing and could totally rock.

    As the event organizer/sponsor you can continue to market the podcast, and charge for it, long after the event… (hello small revenue stream) kind of a pay per view deal. So if I just found out about this conference, and it’s sold out, (or say Eric mentioned one he spoke at three months ago…) but I can buy a video podcast of it for a reasonable fee…

  6. J Lane is refering to the recent flurry of discussion about the need for a Canadian Web design/development conference: Eric, this article couldn’t come at a better time.

  7. Wow, glad I do not organize conferences. But I am happy you posted this, as I have only gone to one conference in my 7 years of working. And that was a free one, sponsored by Macromedia. Why? Never had the luxury of working for a company that A) Would cover the costs and/or B) Let me have the time off. Oh well, I am still young (29).

  8. Well that was quite interesting to read. Now I get at least an idea of why these seminars are that expensive.


  9. We did consider virtual attendance, but honestly not for very long. Suppose we sold 50 physical seats and 100 “real-time virtual” seats. Then, on the day of the event, the outbound pipe dies– we overload it, or there’s a service outage, or what-have-you. The 100 remote people are left blanked out, and don’t receive what they paid for. That’s 100 registrations to refund in whole or in part. Even ignoring the time it would take to handle all those refunds, giving back that money could be the difference between profit and debt for the event.

    The other way to allow remote attendance is to videorecord the whole thing and create a DVD. In order to not miss anything, you’d need a minimum of two cameras with staggered taping schedules; three would be better, just in case one breaks. Furthermore, you’d want to record just the screen so as to capture what a presenter is showing, so it could be intercut with shots of the presenter.

    So let’s call it four cameras with one guy to manage tape-swapping and general maintenance. That right there isn’t cheap. Then consider you have 28 hours of video (seven hours of talking times 4 cameras) to edit together and synchronize with the audio. That’s also expensive. At the end, though, you have a two-DVD set which you can sell. But how many people will buy it, and at what price point? You’re best off hitting a maximum of buyers times price, of course. I have no more idea of how to find that than I do how to price the actual event.

    I mean, if the video costs $10,000 to shoot and produce (which seems really cheap for what we’re discussing) and we think $50 is a reasonable price to charge (but will consumers agree?), we have to sell 200 just to break even, assuming a pure 100% profit on every sale (which is ludicrous, but never mind that now). Would 200 people buy A Video Apart? I have no idea. It’s easy to say “Why sure they would!” when you don’t have to risk ten grand or more on the prospect.

    Now, this is not to say we’ll never do a video. We very well might do one at a future event, and sell the result through the ALA store or some other channel. But it was very definitely not something we wanted to worry about for our first event. Putting a conference together, even one as small as ours, requires a lot of time and energy and attention to a myriad of details. Adding video logistics on top of that just wasn’t in the cards.

  10. Eric, I think those are great thoughts on pricing for seminars, but I think we have the same problems figuring out how to price other things – namely software. It’s easy enough to price a cup of coffee, but we (as users and producers) have a tough time figuring out the value of software. Does Microsoft office provide a value of a few hundred dollars? Does Mint provide a value to me of $30?

    We can answer questions like that easily about physical things like a desk, or a cup of coffee because we only consider the cost of producing an individual item as part of value. When valuing software however, we have little clue what actual costs are, and they get lost anyway because (almost) all the costs are one time, not per item. We are also forced to make the same guesses about volume that you had to do with seminar attendees.

    Why is SxSW only a few hundred dollars and OSCON over a thousand dollars? For me, the value they each have supports the opposite pricing.

  11. Jehiah: absolutely. I don’t have experience selling software or widgets, though; just events (so far). And it had come up often enough in feedback and in postings online that I thought I’d shed a little light on the subject. Since I’ll be talking about it at SXSW, it seemed a good time to get a conversation going.

    I don’t know why SXSWi is comparatively so inexpensive. Knowing what I know now, I’m impressed they keep the cost as low as they do. $250 times two thousand attendees is a half million dollars; O’Reilly’s recent Web 2.0 conference probably pulled in somewhere close to 2.5 million. But those are of course gross revenues, not net. In both cases, they face major venue expenses (at a level I can’t even guess) and staff expenses (ditto) to run things. I’ll bet the Web 2.0 conference turned a tidy profit, but SXSWi? I dunno.

    But of course there’s also the matter of price as a signal, which someone wrote about recently but now I can’t find. (EDIT: Isaac found it.) You could take a conference that only needs $300 per head to cover all your expenses and price it at $1,500. You only have to sell one-fifth as many tickets, but you’ve put out a signal that says “this is exclusive and high-end and professional and worth it”. So you might sell one third as many tickets as you would have at the lower amount, make more money, and get better buzz overall.

    A lot of factors to consider, and no clear guide on how to juggle them. Whee.

  12. Eric, you didn’t really mention sponsorships. I noticed at AEA that MediaTemple and a publisher who’s name escapes me now both sponsored the event. However, they both handed out things – goodies – so perhaps that was the extent of their sponsorship? Is sponsorship a reasonable way to offset some expenses, or do sponsors then expect too much for their dollars?

    Thanks for the explanation. Certainly puts it into perspective for those of us who just had to find the price of admission without actually thinking about what that price was paying for – and we certainly don’t expect you to work for free :)

  13. Jules: actually I was referring to a different conference as I’m not currently involved in organizing a Canadian web conference (although I do think it’s a great idea, and I’ve offered Kim any help I can provide).

    The current conference I’m working on is an e-Learning conference to be held in Lethbridge, Alberta in May.

  14. Interesting article. I hardly ever attend conferences, because I simply can’t afford them. I think your estimate is very reasonable, but still – is internet access really necessary? And why can’t people pay for their food and drinks? I wouldn’t mind if it meant I could attend.

    I once attended a full 3-day Flash Forward conference by being a volunteer, which was a great experience, and I really think every conference should work with volunteers like that. It enables students etc to come and it helps the organization cutting costs, as they have to hire fewer employees.

  15. Eric, I have attended one of your live events and listened to two audio recordings of other events you spoke at. My answer for your DVD Question is simply this, Video Professor has been making money selling their CD’s to a target market so realistically AEA could do the same.

    You (AEA) have a fairly focused market, and if the topic matter ont he DVD’s sticks to the core stuff AEA is about rather than the latest trendy fashion thing like the Labradoodle (a dog breed I just heard about on the news last week) then yes, I think they would be fairly profitable. AS for $50 per DVD this too seems reasonable in that you figure the average tech book you buy (I just bought one on ASP.NET) lists for $49.95 minimum, and that just one book. Currently I am waiting for your new HOT on CSS Book due out soon.

    So figure I average 8 books a year like this, so yeah, I think the DVD idea might be profitable, or atleast doing a web survey of the market to determine interest. Would I recommend it for your first event? No. But, if you told me I could spend $50 bucks for a DVD chock full of stuff from folks like you, Dave Shea, Doug Bowman, Jeffrey Zeldman etc… I’d definitely be interested… but that’s just me.

    At the Carson workshop they were doing an audio podcast and I am wondering since podcasting is starting to gather a big audience do you personally see it as a viable future product for things like AEA events and other conferences?

    Thanks for this thread though by the way as you did provide a lot of insight about what it takes to put a presentation together, for both the organizer and the presenter that I had never considered before…

    Witht hat, I’ll be looking for you in my mailbox in the near futurte…

  16. Dave and I came to a similar thought but I was thinking more in terms of vendor booths outside of the halls.

    I like Jeff’s idea too: I can’t afford to go to SXSW but I would be willing to purchase a DVD (or CD of the podcasts).

  17. My biggest question — make that challenge — with regards to “is it worth the money” is simply trying to figure out the level of experience that a conference is going to be addressing.

    The past 4 conferences/seminars I’ve attended have found me desperately wanting for content that isn’t on a beginning or intermediate level, and hasn’t already been discussed to death in $30 books and on sites such as ALA. Being self-employed, I’m not nuts about the idea of spending thousands per year if I’m not among my peers.

    With regards to AEA, I was extremely excited about coming when it was first announced, but in looking over the description of the event, I was concerned that it would be geared towards those who are still in the early-learning stages of this field. I wote in to the organizers to ask what they thought the level of presentation might be at; I received only one response, and it was somewhat vague: “At the very least, you’ll see how people like Zeldman and Meyer present their work.”

    What I felt was missing from the advance promotion of AEA was a clearly written statement describing “who should attend,” specifically addressing the experience level of the attendee.

    In other words, I’d LOVE to attend a few more conferences, and even $1,000 per day isn’t an extreme expense if it means learning something new — or simply being exposed to a level of content difficult to find anywhere else.

    But in all honesty it’s hard to justify the cost when you have no idea what the level of discussion will be.

  18. So, out of curiousity, from someone who wasn’t there, how many people *did* come?

  19. Dave: I did mention sponsors, although not in detail. Some of our sponsors did so with cash, and others with freebies, and some with a combination. I’m not going to say which is which, as that would hardly be appropriate.

    However, sponsorship is indeed a reasonable way to cover some of the cost. I don’t think it’s reasonable that they’d cover all the costs, but then I might just be thinking too small. In the case of AEA, we’re partly handicapped by not being buzzword-compliant. If we threw around terms like “Web 2.0” and “AJAX” we’d probably stand a much better chance of getting sponsorships from people like Macrodobia. Of course, we’d then completely misrepresent the event, which I won’t do (unless, in the manner of J. R. “Bob” Dobbs, it’s for truly stupendous amounts of money).

    Maaike: no, of course internet access isn’t truly necessary. It’s becoming expected, though, and in many cases it can be had for only a few hundred dollars. I expect that, in the next couple of years, it will be free. There are a lot of things that aren’t necessary, like providing food or covering attendee parking. We did them anyway, because to not do so makes the whole thing feel cheap.

    The single biggest cost for us was, and will no doubt continue to be, provision of food. You might be willing to pack your own lunch or go grab something from a local eatery (assuming there are local eateries), but most people aren’t. And, having been at many different kinds of events, attendees seem a lot less grumpy if there’s food provided. The fact that having it there might have raised their registration cost by $50 – $100 doesn’t really seem to bother them.

    Jeff: honestly, I don’t see podcasting (in the traditional audio-only sense) as being very useful for AEA. A good deal of what we do is visual; for example, my presentation on reworking the EPA’s markup would make almost no sense as audio-only. Listening to my WE05 podcasts, I kept thinking “too bad there’s no screenshot here” or “wow, that made no sense unless you were there”. This isn’t a dig at the WE05 crew; I think what they did was outstanding. I just don’t think that design talks work if there’s only audio.

    Video is another story, as I wrote in an earlier comment.

    Jeff W.: we ended up with just about 100 attendees. Before anyone makes the obvious assumption, though, let me make clear that the hypothetical costs in my posting are just that, as for that matter was the number of attendees. We were close to 100, but not exactly on it.

  20. Jason: you’ve hit on one of the very hardest things to market. What’s beginner? What’s intermediate? And does everyone have the same definition of both? Of course not. What you consider too basic, someone else might consider deliciously complex.

    We did our best to make clear that we were aiming for a higher level on the AEA site, and tried to intelligently answer all those who wrote in with the same question you had. But it’s nearly impossible for me to say, with any authority, “This conference is right at the level you want”. How could I know that? Even if we administered a quiz to every potential attendee, we couldn’t be sure.

    I mean, we’ve seen in our feedback a small but roughly equal measure of both “this was too advanced” and “this was too basic”. Just a few here and there; the vast majority thought it was the right level and mix. We’ve also seen a few people say “too little code” and a roughly equal number say “too much code”. That’s just the nature of the beast.

    In the end, we’ve had to accept that we’ll have a few people attend who are at the wrong level of expertise, and we’ll have a few not attend who would fit in perfectly. I wish there were a way to eliminate that, but so far as I know it’s basically impossible to do so.

  21. Although he was writing about software, Joel Spolsky wrote some interesting articles on pricing:

    “Price as Signal” (November 11, 2005)

    “Camels and Rubber Duckies” (December 15, 2004)

  22. Isaac: thank you! That’s the “price as signal” article I couldn’t find when I posted my earlier comment.

  23. Nice write up. Pricing anything that isn’t churned out of an assembly line is basically a crap shoot. You add up the costs you know about, add in a “fudge factor” to cover those costs you aren’t quite sure about and then cross your fingers and hope you didn’t blow the estimates. Come in too low and you are eating beans and rice for the next month, too high and you lose the customer…

    Its enough to make you wonder why that quarterly tax option looked good in the first place. :)

    On a side note, if anyone is seriously interested in a deeper look at the “price as a signal” aspect I highly recommend taking a look at Influence by Dr. Cialdini. It will help you with price setting and help you avoid getting scammed…

  24. Eric: I definitely agree it is not an easy task for either presenter nor attendee to accurately gauge the level of instruction. This is why I said that [strong]my[/strong] biggest challenge is determining this aspect of the conference.

    My difficulty with AEA is that the website presented what I felt was contradictory information. It did state “not for beginners,” but the topics of discussion all appeared to be geared towards entry-level: “you will learn how to… let user needs guide your site… separate structure from design… make pages that load twice as fast… [etc].”

    This is why I wrote in with my question regarding the level of presentation. All I as looking for was confirmation of that same statement made on the website, that it was NOT for beginners. I expressed that the bullet points listed on the site closely resembled the back covers of the Meyer and Zeldman books on my shelf; thus I was concerned that AEA might only be a review of these same topics.

    Bottom line is that I was a significantly interested customer who was turned away. Now, in reading the post-event comments, I am disappointed that I didn’t attend.

    Maybe I was too critical. But isn’t the collective goal of our industry to find the best ways to communicate accurate information, and satisfy the user’s (customer’s) curiosity?

  25. I’ve been gradually working my way through the podcasts from d.Construct (British Web 2.0 conference, dconstruct.org) and finding them fascinating. Doing just audio recording might well be more cost-effective than video.

  26. Eric,

    I’d been meanining to write about some of these issues for a while – I started a comment here but it’s ended up as an article at my blog.


  27. That way, if 60 people do register, $30,000 will be brought in, thus netting a profit of $2,500. In which case, let”s hope there”s just the one organizer, instead of a triumvirate, or else they”re all looking at a darned small payday. Even a solo organizer is going to wonder if the $2,500 was worth the effort.

    There’s a slight problem with that theory. You have already included regular income loss in the equation, so theoretically even if after the split each organiser gets $2, they’ll get their usual income + $2. Obviously it’s not as simple as this, but it’s definately not as bad as you have implied.

    Personally, I don’t think this is a problem. Sure, it’s hard to make large amounts of profit from workshops, conferences or seminars. But if you work it out relatively well then you’re at least going to end up with the same paypacket you would have had if you just kept hacking away in a corner.

    The only difference is, you’ve added value. And that’s all that matters.

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