Wednesday, 27 June 2012

A couple of event pricing models

Here are a couple of thoughts for event pricing models. I'm guessing these must be used in some cases, but every event I've come across uses fixed price. For both these methods, the cash-flow is upfront via a deposit, allowing variability of price without risk to cash flow.

“What was it worth to you” method

The event attendees pay a deposit up front, up to a maximum price set per event (or per type of ticket). After the event the attendees log into the online service rate the experience. In one model the rating and amount paid would be coupled, i.e. the attendee would control their rating but not the price they pay. In another model, the rating and amount paid would be independent, with the attendee able to determine both. Under both models, the attendee would be required to leave feedback, which would be a valuable source of data. The attendee is then refunded the difference between the deposit and the amount they chose to pay.

One optional addition to this would be to publish what people were paying, perhaps linked to a social networking profile, which would guilt people into paying a fair amount.

It would be interesting to expand this model to "on-the-door" ticket sales. The attendee pays the deposit "on-the-door", but must log in with some kind of account, allowing them to recoup their deposit if the event wasn't up to scratch.

There is an opportunity for a start-up payment service to provide this payment method as a service to event organisers. It is particularly suited to up-and-coming artists, where attendees might not have seen or heard of the act before - the mechanism ensures attendees are at lower risk of wasting money on a poor-quality act, and ensures valuable feedback for the up-and-coming acts.

Auction method

An up-front ticket auction method is most suited to popular events where demand is high. Potential attendees bid the maximum they are willing to pay for a ticket. The top bidders are selected up and to the capacity of the event, and the price is equal to the maximum bid of the first bidder that missed out, plus a bidding increment.

To ensure the maximum price is obtained, and as tickets can be issued electronically, the bidding should be kept open until just before the event. To de-risk cash-flow, a deposit up to the maximum bid would be taken at the time of bid, then refunded after the event.

At any point in time during the bidding the bidders would be able to see whether they were on for getting ticket, and what the price was. They would be able to update their bid (increases only), with further deposit taken.

No comments: