Like many associations, the National Association of Sports Commissions froze meeting registration fees through the recession to keep costs down for attendees during tough times. But this year, hoping that recession had eased, leadership decided it was time to raise fees a few percentage points. “The board said, we have a great product and with the additional fees we can really do a great conference,” explains Beth Hecquet, CMP, director of meetings and events for the Cincinnati, Ohio–based association. The strategy paid off, as NASC had record attendance at its 2011 Sports Event Symposium, April 12–14 in Greensboro, N.C.

Now is the time to re-examine registration fees, experts say, as associations are coming off a period of shrinking revenues. In 2010, revenues dropped 8 percent for exhibitions, according to the Center for Exhibition Industry Research, marking the third straight year that revenues fell. Then there’s inflation. “As the economy starts to come back, associations are going to have to raise their fees in order to pay for the increases at the hotels and convention centers,” says John Parke, CMP, president and chief executive officer, Leadership Synergies, a Prince Frederick, Md.–based management consultancy.

The right pricing strategy can increase attendance, encourage early registration, and maximize income. So how do you know when the price is right?

Do the Math

Typically, an association gets one-third of its yearly income from its annual meeting, and registration fees are a big part of the equation. However, a fee that’s too high can be a barrier to entry. That not only affects revenue generation, it hurts the mission of the association, which is not delivering to members who have been priced out. On the other hand, a fee that’s too low may not help the association meet its bottom line, which means it will lose revenue.

Pricing Tips:

1. Be sure to cover your costs. You can’t make up your losses with volume.

2. Don’t have dramatic swings in pricing. Changing your price too often or too much creates doubt about value in members’ minds.

3. Always have a reason for a price change. If you don’t people will wonder if you are just making this up as you go along.

4. Price creates perceived value. Consumers create an expectation of quality in their minds based on the price you set.

5. Instead of changing your price, use coupons, discount codes, sales, or other price marketing tools. These make people feel as if they got a deal, creating additional emotional value for the purchase.

– Joshua Caulfield, Caulfield Ricks and Associates

“Pricing is critically important,” says Parke. “[Association executives] have to decide whether their price point is going to appeal to the largest potential pool of members. It’s not dissimilar to what hoteliers do when they are looking at revenue management.”

Many associations base their fees on what they charged the prior year, says Andrew Lang, president, Lang CPA Consulting, Potomac, Md., a firm that consults with associations. “But there may be a question about whether they originally set the price in a sensible way.” Often, he says, prices are originally set lower than they should be to attract more attendance.

Any pricing strategy should start with an analysis of the cost of the meeting, experts say. Association executives should tally up the cost of the meeting, including not only direct costs (space, food and beverage, transportation, materials, speakers, complimentary registrations, etc.), but overhead costs as well, such as staff time. “All too often associations, especially smaller associations, don’t account for the cost of staff time. Yet staff time comes with a whole load of additional overhead,” says Lang.

Ultimately, planners should calculate all costs and develop a cost per person to attend based on anticipated attendance. To estimate attendance, planners should look at not only the previous year’s numbers, but a multi-year snapshot of attendance trends, says Joshua Caulfield, president, Caulfield, Ricks and Associates, a Kensington, Md.–based association management company. They should also factor in the affect of the destination, as some cities may be a higher, or lower, draw.

Many associations, including NASC, make this calculation to establish a break-even number. Then, on top of that, they add in the amount they’d like to generate in revenue. So if leaders would like to generate $100,000, that amount would be added to the expenses and then divided by the number of paying attendees.

Scan the Competition

The next step is to look at the competitive environment. This is important, especially now, says Parke. “Before the recession hit, many people belonged to two or three associations, but because of budget cut-backs, they had to narrow it down to one.” Now, more people have to make a choice and often they are going to go with the association that offers the most value.

Association planners should do two types of competitive analysis, he says. They should look at the fees charged by associations with meetings of similar sizes and budgets, regardless of the field they represent, to get a benchmark of what other like-sized associations are charging. Association leaders are often happy to share the information, says Parke. If not, the fees can usually be found on the association’s Web site.

Then, they should look at the competitors within their field to find out— either through direct contact or the Web —what they are charging. Competitors within the industry may not be the same size and may focus on a different niche, so it’s not a direct comparison. “I encourage people to do it only as an environmental scan, because your conference should be promoted in such a way that it doesn’t look like anyone else’s, otherwise, why should someone choose yours over theirs?” says Caulfield. However, people are limited in the number of conferences they can attend, so knowing the competition’s price points is important, he adds.

Additionally, association leaders should do a “lost business analysis,” says Parke, which means surveying members about why they haven’t attended in the past. If numerous responses cite high registration fees, then planners need to take that into consideration.

While the competitive environment shouldn’t dictate pricing, association executives should account for it when setting fees.

Continued on Next page: Selling Sponsorships; Early Birds, Discounts, and Other Strategies

Continued from Previous Page: Do the Math; Scan the Competition

Selling Sponsorships

Some associations use sponsorships to offset overall meeting costs, which, in turn, can reduce the cost for attendees. Planners can get sponsors for luncheons or receptions, to introduce speakers, or to place ads in brochures or on banners. There are an abundance of opportunities for sponsorships. “What we’ve seen groups do is use the sponsorship money to offset existing costs within the meeting budget so that they can lower the registration fees,” says Gregg Talley, president and chief executive officer, Talley Management Group, a Mount Royal, N.J.–based association management company. “Let’s say we get someone to sponsor the bags, lanyards, or lunch—all of that basically goes into the meeting budget to reduce the registration fee.”

But price your sponsorships right: If you are offering banners, ads, or inserts, charge your sponsors more than the cost to produce it, otherwise there is no profit. And even though many sponsorship opportunities don’t cost much to the event producer, says Caulfield, “this does not mean that the sponsorship should be sold cheaply.” At the same time, sponsorships of things like luncheons won’t always cover the entire cost, but should be used to offset costs or upgrade functions. (In fact, he says, sponsorship pricing is a whole separate discussion, as is exhibition pricing and revenue.)

The anticipated net revenues from sponsorships can then be subtracted from the total costs—expenses plus desired revenue—with the remainder being the total from which to establish per-person costs.

Not all associations use sponsorship revenue to offset meeting costs, adds Talley. Many use it as a completely separate revenue stream for the association or apply some sponsorship revenue to the meeting budget. But for some organizations, sponsorships can be an effective way to lower registration fees.

Early Birds, Discounts, and Other Strategies

Early-bird discounts and segmented discounts are excellent tools to give breaks to those who need them, create cash flow, and spur registration rates.

For one client, Caulfield set the early-bird discount as the previous year’s rate, while the regular rate was increased. The association got a huge number of early-bird registrants, about 50 percent, “which was fantastic from a cash-flow perspective.” But even after the early-bird rate expired, Caulfield offered a series of daily or weekly specials for those who qualified. How they qualified didn’t matter—the important part was offering the discount to the membership again.

NASC does it differently, explains Hecquet. Instead of an early-bird rate, NASC charges a late fee for those who miss the deadline, which is about five weeks out.

“If you can increase the urgency to register and get people to sign up much earlier, it makes your event more appealing to prospective sponsors,” says Mariela McIlwraith, CMP, CMM, president, Meeting Change, a Vancouver, British Columbia–based meetings consultancy.

Discounts to segments of the membership can also be beneficial. Often, associations will have member and nonmember rates, or perhaps different rates for exhibitors, students, or seniors. “Are there subgroups in your membership or potential attendee pool that are going to have special needs for financial considerations?” asks McIlwraith. “How do you target them specifically so you are discounting to the people who need it?” Appropriate discounting also is a good way to bring in people who might not have attended otherwise.

Planners can also offer volume discounts. Parke suggests offering packages that enable an entire office, or multiple people from one office, to come for one discounted price. That way you are enticing executives to send people who may not have come otherwise.

Bundling may also encourage participation, says McIlwraith. For the price of the registration fee, attendees may get a particularly relevant white paper or book from the association bookstore.

A strategy that Caulfield used this year was to offer a payment plan. Registrants could pay half the fee up front, and half 30 days before the conference. About 30 percent of attendees took that deal.

Continued on Next page: Total Cost of Attendance; When to Increase Fees

Continued from Previous Page: Selling Sponsorships; Early Birds, Discounts, and Other Strategies

Total Cost of Attendance

When setting fees, planners should also take into account the attendees’ total cost of attendance, explains McIlwraith. That is how much it costs for attendees to come to the meeting, including registration fees, transportation, and hotel costs. If the total cost is high, the reaction might be to cut fees, but that’s not always a good choice, she says.

“You might make a decision to reduce your registration pricing by a certain percentage, but unless you are addressing total cost, it’s not going to have the impact you think on participation rates,” says McIlwraith.

So before cutting fees, make sure there are affordable hotel options for members who need it. Or look for destinations that are easily accessible and affordable to get to for the bulk of attendees.

Planners should know that a reduction in the registration fee will have a significant impact on revenues. For example, a 1 percent increase price yields, on average, a 12 percent net gain in profits, says McIlwraith, citing A Preface to Marketing Management, by J. Paul Peter and James H. Donnelly. Put in meetings terms, if the break-even cost per person was $350 and the registration fee was set at $395, a 1 percent increase to $399 would yield about 9 percent more for the association.

“The difference between $395 and $399 isn’t going to be a dramatic change for people, but it has a really big impact on your bottom line,” McIlwraith says. Likewise, a 1 percent reduction in the fee will have a similar impact.

Experts generally recommend against lowering regular rates, except under extreme financial circumstances, because it creates unintended consequences.

Discounts may boost attendance, but not help the bottom line, says Lang. Sometimes it’s better to have fewer attendees and higher fees.

“My preference is against reducing the actual price and trying instead to crank up the value,” says Lang, perhaps by adding a new twist to deliver more bang for the buck. Or keep fees the same and hold down expenses, whether it’s on meals or speakers. When times are tough, just reduce the amount of the early-bird discounts. Instead of an early-bird discount that’s $150 off, make it $75 off.

Price cuts can create expectations for further discounts in the future, and also tend to make attendees question the value of the meeting. They may start to wonder if the meeting was really worth the higher cost before, says Caulfield. “People are going to value what you have to offer based on what you price it at,” he says. “If you are confident that your meeting is of higher caliber than your competitors’, it should be priced higher. Price sets value.”

When the market is so bad that it’s necessary to lower the regular rates, planners should communicate to members why they are lowering rates. If it’s to help out attendees during tough economic times, planners should state that upfront because it builds loyalty and doesn’t create expectations, adds Caulfield.

When to Increase Fees

Coming out of the recession, associations should consider raising their rates to generate more revenue, says Parke, but it’s not a one-size-fits-all answer. It depends on the association and the industry it represents. If the industry is struggling, it may not be advisable.

If you do increase the rates, it’s important to add value or justify it in some way, he says. Maybe promote a certain speaker, a new session or track, or activity to increase the value.

Or, just be upfront with members and tell them that the increase is necessary due to increasing costs, Caulfield suggests.

Hecquet agrees. “Whenever we raise registration fees, it’s because we want to add something to the conference.” For example, the association has been committed to improving education and has budgeted more money to bring in higher caliber speakers. That’s the mantra for non-profit associations: pour any additional profits back into membership benefits or initiatives that will improve the conference experience.

Caulfield recommends sending out a short survey to members asking if they would object to a small increase in the registration fee. “If the responses are overwhelmingly negative, then you have an issue with the value proposition your meeting is putting forward,” says Caulfield. “If I’m getting something out of this meeting, a small price increase periodically should be OK.”

How often should you increase rates? Strategies differ. Some use the “drip theory”—annual increases of a few percentage points. “Regular moderate increases are far more easy for the audience to digest than occasional large increases,” says Lang. Others hold fees for a few years then raise them periodically, while some do increases only when they make sense.

“A number of factors need to be considered, including market demand, economic conditions, and the product itself,” says McIlwraith.

Ultimately, the calculation comes down to value. If attendees feel the meeting is overpriced and not delivering enough value, “they’ll tell you loud and clear,” says Talley of Talley Management Group. “They’ll vote with their feet if you’ve miscalculated.”

But if you do the math, analyze the market, and survey the competitive environment, you should be able to find your association’s right price.