This an issue that event organizers have debated for years, mostly because common sense seems to fall on both sides of the line. We all know the popular axiom you get what you pay for, but just as commonly held is the notion that free is always better. Before you decide on how to set up your next event, explore the merits of both sides and see which one is better suited to your particular needs.
Shane Reiser is partner at Your Ideas Are Terrible, a corporate innovation consultancy firm, and he wrote a popular piece on the psychology of free vs. paid events. His experience is that free events have a 40 percent no-show rate. What’s interesting is when he charges just $5, this number drops to around 15 percent and when he charges more than $10, the no-shows drop to less than 5 percent.
The reason? Basic human psychology. We like getting our money’s worth, and we try to avoid any situation where we feel like we didn’t get the full bang for our buck. In their story, Pricing and the Psychology of Consumption, the Harvard Business Review cited the 1961 experiment by psychologist Hal Arkes where he asked 61 of his students to imagine they mistakenly bought a $50 and $100 ticket to different ski trips on the same weekend. They were told that they’d have much more fun on the $50 trip and, knowing that in advance, they had to choose one trip understanding the other ticket would go to waste. More than half of the students said they would go on the $100 ski trip rather than the more fun option.
This comes down to the concept of comparative value. Imagine there are five upcoming conferences on effective social media marketing and you need to choose one to attend. If four of them charge admission and the fifth one is free, wouldn’t you come to an immediate, almost reflexive conclusion that the latter option must be inferior? It is basic human nature to start to form assumptions that the presenters, information, and products or services featured must not be as good. In an attempt to be accessible, you can end up hurting your brand.
One of the best ways to entice someone to come to your event is to make them feel like they are getting a special deal such as offering a 15% discount coupon code. This becomes impossible to do if everyone is getting in for free. The most effective way to offer this discount code is through social media which, in turn, helps spread the word about your event. So by going with free admission, you are undercutting effective recruiting and marketing strategies.
A common refrain amongst event planners is that free events make it difficult to plan for food and refreshments. Often, the high no-show rate results in a significant waste of food and money. Their experience is this is less likely to happen with paid events.
In his book, Free: The Future of a Radical Price, Chris Anderson talks about the obstacles we face with the perception of paying for certain things. There was once a proposal to charge people micro-cents per web page visited rather than through a monthly internet service provider fee. The end result for most people would have been tremendous savings, but it was scrapped because internet usage would have plummeted if people knew they were paying every time they clicked on a new page.
Andersen also talks about the many different business models that use an aspect of “free” to enhance their business. The “freemium” model where a basic service is free but users can pay for greater accesses to products and services is currently popular in the tech and software industries. For event organizers, this model represents the greatest potential to entice with the illusion of free without devaluing their brand. A free admission with paid tiers that offer smaller workshop groups and one-on-one consultation is a best-of-both-worlds solution.
Another popular option is to offer free admission in return for detailed customer feedback surveys which often prove to have more value than, say, a typical $75 ticket price.
Whether to charge or not is not a one-size-fits-all proposition. It depends greatly on the size, audience and purpose of your event. But hopefully these principles will help guide you as you start planning for your next industry event.