This five-part series explores the value-based pricing model’s inner workings and breaks down the model’s most basic elements. The model focuses on competition and cost like other models do but also factors in an often overlooked aspect of your events – the customer. You will also see how this model can maximize your revenues and deliver an experience your customers won’t soon forget. In the first part, we cover the basics of the model. In parts two and three, we look at how the value-based pricing model reveals gaps, increases value, and how the prices should guide the cost. Finally, in parts four and five, we put the value-based pricing model into action and look at determining your ticket types and setting and increasing prices. Our primary goal throughout the series is to break down these various parts to make you comfortable implementing this model into your events.
This month, we dive into the different ticket types you might encounter or even use for your events. Ideally, if you stick with the value-based pricing strategy, you will want to use more than one ticket type. As we have discovered, a single ticket at a single price is very unlikely to work for everyone. With multiple ticket types, you’ll attract a wider variety of clientele by catering to those who perceive more value in higher priced tickets while still serving those who perceive less value. The other advantage of multiple ticket types is that they also increase the perceived value. You make the cheaper tickets look like a better deal while the more expensive tickets look VIP. While we will cover some of the more “standard” ticket types, what you offer to your customers is entirely up to your imagination.
We can group most ticket types into four groups: regular tickets, special access, targeted discounts, and group discounts. Regular tickets are your standard, general admission ticket that you find at most events. Targeted discounts are discounts given to all groups that can “prove” membership (i.e., students, children, military members, etc.). Group discounts offer discounts on bulk purchases.
Finally, we come to the special access. Special access is probably the largest group where you will have a lot of room to experiment and incorporate many different ticket types. You are generally looking at things like VIP, Early Access, or Backstage Pass tickets in this category. We will get into those more here in a minute, but if we just look at the other three ticket types, you can already see the different customers we are trying to serve. Even something as simple as using those three ticket types will help entice a wider variety of people to come to your event, and even then, you can still be a little creative with these ticket types.
Special Access Tickets
Now, we look at these special access types. It is easily one of those areas where the imagination can run wild with ideas, and you can create dozens of various ticket types. How many types and what all you include will be unique to each event, but you are ultimately looking to elevate the attendee experience with each ticket type. As you are already aware, each attendee is unique, and the perceived value for various options will differ from person to person. Some people will want General Admission tickets, and some will want VIP All-Access tickets that give them everything under the sun. That still leaves a lot of ground to cover in the middle. The best way to cover that ground is to break things up a little and create an a la carte menu for your attendees to let them customize to their experience.
Let’s say your VIP All-Access ticket gives premium seating for the show, a meet and greet with your guest artists, and signed free merchandise by the guest artists. Well, what if your other guests only want the premium seating? What if they only want to attend the meet and greet? So, we start dividing things out, which gives us even more options with minimal effort. We have our VIP All-Access Ticket, we have premium seating tickets, and we have meet and greet tickets (which include general admission to the show). Putting those together with the two discount groups, general admission, and our Early Access tickets from early, we now have nine ticket types (if we divide out the discount groups), but it doesn’t have to stop there.
Limiting Tickets Per Type
Alright. We have our example ticket types figured out, but do you remember the golden words that help drive sales? Sold out! Now we start to harness the power of those words to help drive sales because we will limit these ticket types. It doesn’t make sense to have 500 of each ticket type because you can’t give 500 people the VIP All-Access ticket. We want to limit the number of tickets for each type to help create a sense of exclusivity for attendees, which helps drive sales. If there are only 5 VIP All Access tickets and you want one, you will buy quickly or risk not getting one, and the less there are, the faster they will go. Then, once one type is gone, you get to use the golden words, and upon seeing those words, your customers will be more likely to purchase tickets.
Hold on a minute! We forgot the customer. We went through all this trouble of creating these ticket types, but we never asked for customer input. Why would they attend your event, or what do they find most appealing about your event? What might they want from a VIP experience? While these answers may seem obvious, don’t assume – reach out and speak with them directly, but avoid talking about specific prices. Instead, try testing your pricing out in the wild. With today’s technology, you can quickly see how different ticket types perform with your test prices. It might take a few iterations of your event to understand what customers are willing to pay, but that experimentation will significantly boost your bottom line.
Whatever ticket types you come up with, you always want to keep the concept of value-based pricing in mind. By understanding the value your customer receives from each particular ticket type, you’ll only add ticket types that create higher perceived value or allow you to serve attendees who perceive less value without degrading your overall average price. The best ticket types are those that generate a lot of value for customers while adding minimal cost to you and those that allow you to tap into those with lower perceived value but in a way that reduces your cost. Next month, we will finish up our discussion on value-based pricing by figuring out how to develop the right prices for our tickets.
Jordan Busboom is a Technical Services Assistant at Indiana State University’s Hulman Center. He received degrees from Indiana State University in Music and Mathematics in 2018.