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Transitioning from traditional face-to-face events to a virtual format can be a real challenge for planners. One of the toughest problems is deciding how to price your virtual event. With the tough economy, it is especially tempting to simply not charge for your event. This article urges planners to take a close look at the economics of virtual events and really understand the value you are delivering to your attendees.
Derrick Johnson, CMP, DES, of the Tally Management Group (TMG) will help us explore the many issues in pricing registrations for virtual conferences.
It’s not “Free”
“The biggest mistake planners make is not charging for registration,” explains Johnson. “People make this error because virtual events are ‘new.’ Unfortunately for associations, making virtual events free builds a correlation between these events and complimentary membership services. Such a pricing model is simply not sustainable.”
It is important to keep in mind that your virtual event is not free. It takes human labor to organize and produce the show. Furthermore, there are investments in technology and production tools. More importantly, your content has value – that is why people are consuming it.
That said, there may be cases where you want to offer registration at no cost. Some examples are that a sponsor may be underwriting the event or the production of a “free” event might be part of your organization’s mission. In these cases, state these reasons as why there is no charge. Playing up the word “free” can imply that your event has no value.
“A better strategy is to mix free content with paid key content items such as keynotes,” Johnson adds.
Virtual Event Overhead is Greatly Reduced
In all likelihood, the expenses in producing your virtual event are greatly reduced from your traditional face-to-face meeting. Here are some of the major expenses that you can deduct from your virtual meeting budget:
· Hotel – especially attrition
· Travel
· Catering/Food & Beverage costs
· Audio/Visual
· Signage and print collateral
Your attendees will also save on hotel and travel, not to mention per diem. These reduced expenses need to figure into your adjusted registration fees.
Johnson looks at the relationship of expenses and pricing this way. “Travel aside, virtual event pricing needs to consider that attendance is more accessible to larger demographics and is hence more scalable. A drop in price levels allow more people to take advantage of the opportunity. Even with lower overhead costs, the virtual event still costs money. If organizations look to exceed expectations of stakeholders, there needs to be an investment in a virtual event platform.”
Virtual Event Attendance May Actually Increase
There have been consistent reports in which virtual meetings result in jumps in attendance numbers, typically in the 15 to 30% range. Some of the most extreme cases include Salesforce World Tour Sydney which aimed for 15,000 attendees for the traditional in-person meeting, but actually received over 80,000 (!) participants when the conference had to go virtual. An early adopter of EventRebels Virtual Conference Software saw nearly a three-fold increase in attendance in what used to be a small meeting.
Johnson notes, “I’ve observed definite increases in virtual event attendance if the event is designed, marketed and executed in a way that is specifically re-imagined for a virtual experience and digital learning. I’ve seen 70% increase and more in registrations because of increased accessibility and reduced price. Increased accessibility includes price, lack of travel, additional time saved.”
Besides the lack of face-to-face events caused by the pandemic, there are a lot of reasons for the jump in virtual attendance, but reduced costs in the form of registration fees and eliminated travel would be top of the list. It is important for the planner to realize that there is usually minimal marginal additional cost for increased virtual attendance as opposed to the face-to-face meeting. The latter has large fixed costs and limits including catering, meeting room capacities, registration supplies, and so forth.
What is Lost in Virtual
This is not to say everything is perfect in the virtual world. There are many ways to describe the benefits of face-to-face meetings, but perhaps the best word is “experience.” In recent years, many meeting industry leaders have been playing up the concept of experience in planning in-person events. The notion of “FOMO” or “Fear of Missing Out” has been a big driver for much of the marketing of face-to-face events. The importance of the event experience may seem truer than ever during the COVID-19 quarantine. If so, the loss of the in-person experience may need to be factored into your virtual event pricing.
Strangely enough, the after-effects of the pandemic may greatly decrease the benefits of experience in future face-to-face meetings. In particular, social distancing, wearing masks, and increased sanitation protocols will probably make group gatherings less appealing.
Face-to-face networking is related to this loss of experience. However, there is a lot of software being developed to enhance the networking aspects of virtual events. Given the breakneck speed of technological progress and social change, it may be that the “experience gap” will close greatly in the next few years.
“Virtual experience should not be the same price as in-person. They are two unique and different experiences that deserve their own individual pricing structure,” Johnson continues. “Generally, the virtual experience should be 10-30% of in-person experience. 10% for first time virtual events (such as through a member discount), and 30% for groups that have been producing virtual events for a while. For 10% pricing, you need to make clear it’s a one-time discount – you can’t just jump to 30% without warning.”
EventRebels has been associated with a number of virtual conferences where the price was discounted only 30% but still received record breaking attendance. In many cases, some experimentation will be needed to find the size of the discount – whether it be 90% or 30%.
What about Profit?
Before diving into pricing examples, something must be said about the profit of an event. Since expenses are greatly reduced, in most cases what you charge for a virtual event will be reduced. On the other hand, the registration count for a virtual meeting may be greatly enhanced. Overall though, it would appear that the net revenue for your virtual meeting would be substantially reduced in comparison to say, your annual conference, because of the greatly reduced registration fees and sponsorship levels.
Let’s say you are able to make a small profit on your virtual meeting. However, it will probably be much less than your annual conference – the latter being your main source of funding of your organization. What this implies is that it is not enough for your event to be profitable – your virtual event pricing must be part of a general strategy of revenue raising for your organization. In short, if you replace your main conference with a virtual conference, you will probably need other ways to replace the revenue gap. More virtual events is one option, but there are others.
“Most important part is developing a virtual event strategy, with a long term plan and pricing is part of that discussion,” says Johnson.
A Word About Subscriptions
An obvious add-on to virtual events is making the content for your show (already recorded) available on-demand after the conference. Here are some things to consider in making your content available on a subscription basis after your show:
· Individual content can be purchased as desired. For example, maybe the purchaser may only want to view the keynote or a certain workshop.
· Access to content is only available for a pre-defined period of time (such as a week)
· Offer packages such as certain tracks or groups of 5 sessions.
Regarding on-demand Johnson says, “Your cost structure needs to take into consideration the archived/on-demand experience.”
What is the Right Registration Price?
With these background concepts in place, we can now review the common pricing modules planners have been using for their virtual events.
· No Charge (aka Free). A surprising number of shows have offered their virtual conference for free for no other reason than thinking people will not pay for this kind of event. This is not a good reason for offering your event for free. Better reasons include sponsors covering the cost, it is part of the mandate of the organization, or the event is mainly marketing in nature. Not charging because you are unsure of the response is not a very systematic way of dealing with the problem.
· Pay What You Can. Some industries have been hit harder than others by the pandemic. The Pay What You Can model shows that you care about the participants. From the revenue side, however, it is the equivalent of just asking for a donation. Expect most people to give little or nothing. It may actually be better to go with the no charge and a sponsor model.
· Doing the Tough Work In this case, the pricing is based on a serious analysis of expenses and revenues as previously described. That said, a couple of additional points should be mentioned:
o As with face-to-face conferences, sponsors can be used to offset registration fees.
o It still may be necessary to “play” with the prices because of the rapidly changing environment and uncertainty, but with a proper analysis you will at least know your targets.
o As pointed out earlier, working through the 10%/30% model is an option if you are unclear about your registration numbers.
o With serious pricing studies in place, the following are some other techniques to help you reach your registration revenue goals.
· Group discounts. Already a popular tool in face-to-face meetings, group discounts can be especially effective in virtual meetings where the attendance could be expected to swell. Often, conference registrations are limited by the number of people an organization can send on travel. With lower registration prices and eliminated travel, group discounts can result in entire corporate teams joining in the meeting.
· Multi-tiered. Not all content for a virtual conference needs to be available for every registration. Some content can be restricted to smaller groups at a “premier” rate.
· Subscriptions and Packages. The real future of virtual events is making content available over certain time frames – both during and after the conference. Already, packages of 5 and 10 virtual sessions are growing popular. The big advantage of virtual content is that it can be made available indefinitely after the conference at on-demand rates. This turns your conference content from a one-time offering to an ongoing revenue stream.
· Last Minute Registrations. There is a very strong trend for attendees to register in just the last few days before an event. We were told of one large conference that had 70% (!) of the registrations occur in the last few days. To control this trend, the age old practice of early bird registration fees can be very effective. Not only would it direct more registrations forward in time, but you can use early bird rates to discover your ideal price points.
One of the most effective ways to reduce last minute registrations are Swag bags. Because of the pandemic, people are starved for some attention. A Swag bag consists of goodies from sponsors and is usually in a small mailable box. The promise of a surprise package and early-bird rates seems to be effective in driving people to register in a fashion more timely for the show organizer.
Putting it all Together
Pricing your virtual event properly begins with a realistic look at expenses – especially those that have been eliminated – and other sources of revenue, especially sponsorships. A look at how content can be repurposed, such as through subscriptions, will also give you more options. As Johnson concludes, “The most important thing is an overarching event strategy that drives revenue. Does your current virtual event pricing relate to future events your organization will be having?”
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