Part 2 of 7
So now on to part 2 — helping you understand your pricing strategy.
How do you know a good price from a bad one?
Self-financing a race can be expensive, especially if you can’t get enough racers to show up.
Why racers don’t pre-register is not an easy question to answer.
Everything from schedule conflicts and finances, to competing events to lack of exposure, could get in the way of capturing that precious pre-registration dollar.
Price, however, is often a contributing factor.
You have to convince racers to pre-register early, but you also have to raise the price to account for all the last minute stuff you need to deal with when racers register late.
Not raising your prices removes any benefit to the racer who pre-registered early.
Why would anyone register early if the early bird price will be the same as the race day price?
They could just wait until race day to register without penalty.
Raising prices at scheduled times rewards early registration and creates scarcity.
Scarcity is when your customer thinks you are about to run out of something.
This can be created by limiting the number of total racers allowed to register, having a deadline to actually register, or registering when the price is much lower.
These factors do motivate some racers to act.
Yet, raising your prices or only allowing a limited number of open spots does push away racers too.
The challenge is knowing which action produced what result.
However, to know that, you first need to know if your prices are correct, to begin with.
Most race promoters get trapped in the “did I set the right price” loop.
This loop goes like this:
- Thought #1 — What if it’s too high and no one shows up?
Result: I’ll go broke!
- Thought #2 — What if it’s too low and no one shows up?
Result: I’ll go broke!
- Thought #3 — Is it just right and no one shows up?
Result: I’ll still go broke!
Yup, very frustrating!
This uncertainty is what gives most race promoter’s sleepless nights.
Pricing your race registration is probably the toughest thing you will do because it requires both art and science to figure out.
There is a multitude of pricing strategies you can use to figure this out.
However, a strategy is only as good as the information you have to build it.
Price your race correctly, and your can enhance how many people pre-register for your event, creating the foundation for a race that will prosper.
Get your pricing wrong, and you may create a barrier that will push people away.
That means you need to get your price as close to correct as possible!
But that’s why you’re here!
You want to get those prices correct and be confident in how you set them now so that you can set them correctly in the future.
Fortunately, this is what will become your overall Pricing Strategy.
A repeatable process for setting correct prices.
Ok, I know what you’re thinking.
The word strategy can sound scary to some people.
So let’s break it down in a way that takes the edge off.
Many people have many different ways of thinking about what a strategy is.
A good way to cut through all that confusion is to think of strategy as this:
“A simple way for you to go about deciding how to do something, and then reusing it again to create the same result.”
Doesn’t that sound easy?
In this case, that simple way will become YOUR WAY of deciding what your pricing strategy will look like.
It will be used over and over once you have it in place.
It will become one part of your overall system — your way of doing business — for producing races.
It is key that you understand that every time you figure out how to do something right, and you need a way to not forget how you did it.
You need to repeat what you learn.
To do this, you always need to be writing them down so that you can repeat them.
Then fix and refine them over time until you can get the same result each time it is used.
The end result is a way of doing something that you can then teach to someone else.
Hence the repeatable part of creating the system in the first place.
Hopefully, by now you have thought through plenty of your How Do I’s like:
- How do I choose what to promote?
- How do I deal with insurance?
- How do I design a course?
If you haven’t been writing them down, I strongly encourage you to that.
With all that said, your pricing strategy then becomes another component in your “how we do it here”.
It is your system of how you promote races.
Developing your Pricing Strategy
Your pricing strategy may not be exactly the same as another promoter’s pricing strategy, and that’s okay.
What does need to be the same are the three components you use to develop that strategy.
Component #1 – Knowing you NEED a process
The first component is knowing that you NEED a way of coming up with your prices that you can reuse each time.
This means your process should be:
- Something you will actually follow
Why is this the first component?
Think about it.
If you set your prices using a different way each time, how will you know what works?
You might as well guess and hope for the best.
Guessing is the same thing as not having a system at all.
But if you have a strategy for setting your prices that include the same steps each time, and you actually follow it the same way each time, you can begin to understand what price works and why.
Component #2 – Knowing HOW it works
The next component is understanding the importance that data places in running your system.
You need to develop the right data to feed your system.
Without the proper data inputs, you will never know what price produced what result.
By knowing you are going to need this data is important to remember as you develop your strategy.
That way you can make sure you are collecting it as you go instead of trying to find it after it has become too late.
Component #3 – Knowing WHY it matters
Knowing the WHY behind what makes a price works just so happens to be your last component.
Knowing the reason behind a price’s success is a big deal.
Why is it a big deal?
Because if you know why a price works, you can benefit from that knowledge multiple times.
However, you will never know why a particular price works if you never make an attempt to measure your efforts with a system that you can follow and repeat.
What comes next?
For now, you should hopefully understand why you need a pricing strategy.
Stay tuned for your next email in this series where we take a deep dive into the third secret in your pricing strategy — the HOW we create it.
Each of these next three parts will focus on the kind of data you need to collect, and how that data is used to help you make pricing decisions.
We will begin with answering an important pricing strategy question:
I will be back with that one in a couple of days, so watch your inbox.
Kyle M. Bondo
Reckoneer | reckoneer.com