Figuring out the right registration price to charge for your race is not easy.
In fact, when it comes to setting your race’s registration price, most race promoters like yourself, start freaking out.
Think about the problems your prices can give you:
- Too low and you don’t make any money.
- Too high and no one shows up.
- Too low and you don’t recoup the extra quality you spent good money on.
- Too high and no one comes to even find out about your extra quality in the first place.
- Too low and you go out of business.
- Too high and you go out of business.
Ok, I’m freaking out now!
That’s why most race promoters get pricing wrong.
They try to set their prices based on chicken bones, a roll of the die, or straight-up guesses.
One of the most critical elements of their business — left to a guess.
Worse yet, they don’t even know if the guess worked.
Did it bring in more customers? Did it push customers away?
They have no idea.
Then they go out of business.
Because they had no method, no system, and no strategy in place to help them make intelligent decisions regarding prices.
Furthermore, without anything in place, they could never make sense of any of the decisions they did make or manage to get right.
They left their entire business to chance.
But not you!
You’ve decided to do something about your pricing, and not leave it to chance.
You’ve decided that you owe it to yourself, and to your business, to be relentless in managing your pricing.
All you need to do now is put your thinking cap on, roll up yourselves, and get ready to do the work your prices need doing.
Today, we’re going to cover the three (3) main principles of pricing:
- Principle #1 — Know that you are building a race to make money
- Principle #2 — Know the difference between price and sales
- Principle #3 — Know the difference between under and overpricing
Are you ready?
Alrighty! Here we go!
Principle #1 — Know that you are building a race to make money
Race promotion is a business, and a business requires you to make money.
This means you need to make enough revenue from race registrations to cover your costs AND make a profit.
Why do I need to make a profit?
Because like I’ve explained in my article Race profits are evil, and other money myths, without a profit, you don’t have a business, you have a hobby.
If you are running a race promotion business, then you need profit to keep it running.
You cannot grow your business if you only go through the hassle of putting on a race to have it cover the costs.
And a business that does not grow will eventually go under.
Why will it go under?
Because the nature of the economy is that prices go up. If your revenue stays flat, your costs will, at some point, overcome your revenue.
Having more costs than you have revenue has a special name in the business world: it’s called bankruptcy.
Principle #2 — Know the difference between price and sales
Many race promoters believe price alone drives sales.
YOU drive sales!
Your ability to sell your race is what drives sales.
Your price only enables you to sell to the right people.
If your prices are wrong, you will have an incredibly tough time getting customers to notice your race.
Having a correct price for the potential customers you’ve targeted goes a long way in supporting your selling efforts.
But the price is only an element of sales, not the driving force behind it.
Principle #3 — Know the difference between under and overpricing
Underpricing is what happens when you are overcome by the urge to be cheap.
You may want to underprice your race in an attempt to attract customers that might think your competitor’s race registrations are too high.
You’re hoping by being the less expensive option, you will drive up the volume.
However, most racers want to get their money’s worth out of race registration.
Especially when there are only so many races they can attend in a given season.
Just when you think that having a lower price will be good for business, your customers will be thinking that your low price means your race is cheap.
And not cheap in a good way — cheap in the bad quality way.
Low prices can be misinterpreted to mean low value and can impact your ability to cover your costs.
Don’t give your race away by pricing yourself so low that you go out of business.
On the other hand, overpricing can damage your turnout too.
Racers know what your competitors are charging for the same kind of race.
If you charge more than they do, you’re going to push them away.
This is the struggle you will have between showing your value and getting paid for showing your value.
If you think you’re offering just a little bit more than your competitors, you may get away with pricing your race higher to reflect that quality.
How will you know if it’s the right price?
Put yourself in your customer’s place.
Is the price you’re charging seem fair to you?
If the answer is No, then your prices are too high.
This is especially true when you’re first starting out.
You need to be careful not to price yourself so high during your first few races, that no one thinks you’re worth it.
Just the Beginning
If you embrace these three (3) principles of pricing, you should start to see why having a process can help you set prices.
A process can help you navigate the delicate balance between maximizing profits, showing value, and maximizing turnout.
Having a process will also keep you focused on the important parts of your pricing strategy, and potentially help you stay in business.
Now go build something great!