3 Pricing Strategies for Your Fundraising Event
The United States is a nation of consumers, so you’d think that “pricing” would come a lot easier to us. But the reality is that determining the correct “price” for a product or service is a complex exercise that retail outlets perfect only by studying millions of transactions.
In the nonprofit world, you’ve got to set A LOT of prices, and you don’t have the benefit of millions of transactions across thousands of locations that will show you exactly how the public is reacting to your price. The only data you can rely on are the results of your previous events and the pricing strategies you’ve observed at other gala events. That’s not a huge data set.
You have a complicated task in front of you, because you’re trying to achieve multiple goals:
- You want to raise as much money as possible for your organization.
- Yet, you don’t want to force a massive price increase on your existing attendees for fear of insulting them and/or driving them away.
- You don’t want your price to be so high that the people who are most passionate about your mission have no chance of attending.
- You’ve got to set your price high enough so cover all of the expenses of running the event plus deliver a healthy margin to your organization so you can use that money to pursue your mission.
So let’s start off by setting the floor — determining the lowest priced item that you’ll offer.
THE LOWEST PRICE:
This is a sticky area for a lot of nonprofits, because they look at the low end as the space in which their least affluent attendees to make a contribution (e.g. think teachers or firefighters). So you include a $20 wine pull or silent auction items that you expect to sell for $40 or $50.
We believe that except in extremely rare circumstances, the lowest value giving opportunity should be $100. We can best explain our rationale through an analogy about a wedding.
Think of a wedding registry. If you were going to a wedding for someone who is not a close friend, but you’re definitely going to buy a gift for them. If you log into their registry and see items priced at: $20, $50 and $75, which item would you buy for this “not-close-friend”?
Chances are, you’re going to choose the $20 or $50 option.
Now imagine if that same couple sent you their registry with items priced at: $100, $125 or $150, which item do you think you would purchase?
Mostly likely you would buy the $100 item. That’s the reality of registries. When the couple lists all the things they need, they’re giving guidance on what you can give them that will be meaningful to them, and their audience of attendees appreciates the guidance and will act by purchasing one of the items on the list.
The attendees at your event have the same motivation. They want to give you something that is valuable to you, so they are looking for guidance from you about what you need and at what level.
You may be thinking that your guests can’t afford to give $100, but have you asked them? You might say, “Yes, we’ve asked them. We gave them the option to purchase things at $25, $50 and $75, and most of them chose $25, so that proved to us that they didn’t have much to give. We suspect that if you’d presented that group of donors with the option of $100, $125 or $150, you’d be surprised at how many of them would have donated $100 to your organization.
Don’t sell your least affluent donors short. They love your organization; they care about your mission, and they’re looking for guidance from you about what level gift you need.
CHECKING THE BOX:
Remember, this is a fundraising event benefiting an amazing cause. People who attend have it in their minds that they should give you some financial support. They may or may not have a deep connection to your organization, but they absolutely plan to give “something”. So they’re looking for an opportunity to make a gift and “check the box”. If you give them a very cheap opportunity to check the box (e.g. a $20 opportunity drawing ticket) they’ll take it, and then they won’t give another penny the entire night.
Instead, consider making your minimum opportunity drawing ticket $100 or more. Again, you’re guiding your guests by letting them know the minimum gift size, and you might be surprised at how willingly your guests will rise to meet the invitation.
If you’re worried your attendees will be insulted or turned off by a higher minimum, publicize “prices” ahead of time. This gives them time to consider if they want to come to your event, or if they want to support your cause in another way.
TOO MANY CHOICES = ANALYSIS PARALYSIS
While you want to give your donors many opportunities (and options) to support your organization, don’t give them too many choices or they will succumb to paralysis by analysis. Too many options can overload them and make their heads spin, causing them to donate nothing.
For example, in your silent auction, you should have no more than one item per five guests. So if you have 500 guests, your silent auction should have no more than 100 items. If you have more items than that, consider packaging them together. Too many items is one of the largest fundraising mistakes, because it causes predictable reactions:
- Scarcity is the driver of urgency which is the driver of bidding. When you have too many items, you completely lose the power of scarcity.
- Too many items takes too long to look through. Many people don’t want to place their “first” bid until they’ve seen everything and know everything that they’d like to bid on. So too many items slows down the bidding.
- Too many items also dissuades people from bidding on too many things. What if they bid on 5 items and win all of them? They might go way over their budget. So too many items can feel financially threatening.
- Too many items provokes a garage sale discount seeking attitude among your guests. They’re looking to get things on sale, and they’re not going to push the prices.
Plus, it’s important to pace – and space out – donation opportunities. For example, once a donor knows she won only two of the four silent auction items she bid on, she can then access her budget and commit more funds to the paddle raiser.
SELECTING LIVE AUCTION ITEMS
Is your event a black tie gala in a downtown hotel with valet parking and a steak dinner? People expect to pay a higher price at a gala like that, and they expect the silent and live auction items to be higher ticket items.
As a rough guide:
- if your individual ticket price is less than $100, then your live auction items are going to sell for hundreds of dollars, not thousands. Typically, you would expect your best live auction items to sell for $850 to $950.
- If your individual ticket price is between $100 and $175 then your live auction items are likely to sell for the low thousands of dollars. Typically, you would expect your best live auction items to sell for $2,000 to $2,500.
- If your individual ticket price is greater than $175, then your live auction items will sell for multiple thousands of dollars. Typically you would expect your best live auction items to sell for $5,000 to $6,000.
Keep that in mind when you’re choosing the items that should go into your live auction. An African Photo Safari is a great item, but if your individual ticket price is $75, chances are you don’t have two people in the audience who can bid this item up to the $6,000 price that it should fetch. On the other end, if your individual ticket price is $225, then don’t waste the audience’s time with 4 tickets to a Rockies game that is likely to sell for just $600 or $700.
YOU’RE NOT SELLING ADVERTISING
Sometimes when you’re talking to your sponsors you may forget what you’re selling. You’re talking to them about having their logo on the back of your program guide, and their logo on screen during the event, and their name being announced by the Master of Ceremonies.
So you may start thinking that you’re actually selling advertising. Don’t let yourself make that mistake. A gala is generally a terrible advertising buy for a corporation. If they’re spending $10,000 on a table, and you’re showing their logo to 500 attendees, then they’re paying $20 per guest to just make logo impressions on them — these aren’t actually impressions about the product they sell, just the branding of their logo.
These are companies that have millions of customers, and if they had to pay $20 per customer just on branding, they’d go out of business.
So always remember than the branding of their logo is secondary to the impact they’re having on your organization. You want to promise them that you’ll proudly display their logo, but when you talk to them, make sure they understand how their dollars are going to impact the people you serve. That way, when you ask them for more money, you’re talking about the value of your mission not the value of the advertising at your event.
SPONSORSHIPS AND INDIVIDUAL TICKET PRICES
This is the toughest pricing terrain. Here is where you’re guided by a lot of the history of your event, but keep in mind the reality that below certain thresholds every number is the same.
For example, we’re all very accustomed to seeing things priced at $19.99 or $39.99 or $99.99. The reason retailers do this is that they understand that our brains compute every number below a certain threshold to be the same. So if we’re considering a purchase of an item that’s just under $100, then whether the price is $99.99 or $92, we’re going to make the purchase. But if the price is $101, we might not buy it.
So when you look at your individual ticket price, think about whether anyone would even notice if you raised the price. If you’re currently charging $125 per person, what would happen if you changed that to $150? Would people NOT attend your event, because the price went up by $25? Or would your organization just make an additional $25 per guest?
The same is true with your sponsorship packages, although this is a more complicated conversation with your sponsors about what they’ve been paying and what you’re now asking for. Don’t spring it on them, but talk to them about deepening their support.
So What Do You Do?
When pricing tickets, auction items and additional fundraising opportunities, you want to meet your guests where they are AND raise more money for your organization. Hold your donors to a higher standard and allow them to decide if they can or cannot support you. By having higher minimum thresholds, limited, well-paced donation opportunities, and putting out a vibe that you’re serious about raising money, your charity will be set to host a successful fundraising event.