Eleven months before the Second Annual Conference of the Association of Cautious Educators (ACE), its planning committee is meeting for the first time. The association broke even on its first four-day national event with a registration fee of $210. There are many topics to discuss, but the agenda begins with setting the 1996 conference registration fee. Staff have prepared three options for the committee to consider:

1. $210 (no increase)

2. $220 (five percent increase)

3. $240 (15 percent increase)

Where would you set the fee? Note your choice now so that you can compare it to what your choice might be after reading the rest of this column.

Rate Setting During the next three hours, the committee debates the various pricing options. While maintaining the current fee for a second year would be nice, higher costs (particularly paper and postage associated with marketing, and expanded use of higher-priced audiovisual equipment) argue for some increase. At last year's attendance levels, this would assure profitability, but some committee members wonder if it would hurt this year's attendance. They note that continuing education programs have high fixed costs (e.g., faculty, meeting space) and relatively low variable costs (e.g., meals, materials), and therefore high volume is essential.

Others question the message an increase might send. While a five percent increase seems reasonable, the planning committee concludes that the best they can hope for is to once again break even.

This time-consuming rate-setting exercise is played out regularly-even obsessively-by program committees and staff, often at the expense of the rest of the planning meeting's agenda.

Why Agonize? Attendees Don't! While setting registration fees or tuition rates is a necessary activity, these fees typically represent a small fraction of the total cost attendees bear at national meetings and thus should have little influence on audience acquisition or conversion rates. Consider the year-to-year change in costs associated with attending a typical four-day national program:

Sample Costs of a Typical Four-Day Program (Year I, Year II) Expense

Year I

Year II (+5%)

Transportation

$692

$727

Meals ($50/day)

$250

$263

Lodging ($155/day)

$775

$814

Registration fee

$395

$415

Miscellaneous

$100

$105

Totals

$2,212

$2,324

As this example suggests, registration fees may represent only 18 percent of the total cost of participation. A typical five percent increase in a $395 registration fee is approximately $20. Increase all other items associated with participation by five percent, and the total increases $112, to $2,324. As a percentage of the total cost of participation, the $20 fee increase adds less than one percent to total direct costs.

In addition to the direct costs, there are other costs associated with the prospect's time away from work, home, and family. Consider these, and we can see how insignificant the registration fee increase is compared to the total cost of attending.

Price and the Point Raising prices is not always the best way to increase revenue. But the degree to which we raise our fees is not as important as the attendee's total cost. So how do we price? By following the logic of "price points"-points along the continuum of possible tuitions, above or below which people's buying decisions are influenced. In my own work in continuing professional education, I have set my rates at $45 and $95 price points. Anything in between has little impact. In the example, a five percent or 15 percent increase keeps the tuition below $245 and therefore is not likely to be a discriminating variable in an individual's decision to attend.

Accordingly, I recommend going up to $245. Conversely, if the committee is uncomfortable with moving all the way from $210 to $245 (a 17 percent increase), I recommend reducing the fee to the next lowest price point-$195-and making up the difference with increased volume.

The psychology of pricing along with the real costs of participation are central to the offer; and the offer is one of the key variables prospects consider in their

decision-making process.

As we enter the New Year, let us make two pricing resolutions: one, to spend less of our valuable time (and that of fellow committee members) agonizing over that five percent tuition increase; and, two, never, never to set our fee at a less than optimal price point. Do I hear $245?