Why people don’t value free events

The science of trade-offs

Opportunity cost is a term studied in economics classrooms around the world, but a concept that we encounter everyday. When deciding what to do with our money or sometimes more importantly our time, we are constantly weighing our options.

For example, when deciding where to go to lunch today, I was choosing between a delicious sushi restaurant or decent burritos at a restaurant with an outdoor patio. I picked burritos because it was a beautiful day, but the opportunity cost of my decision was delicious sushi.

Signaling the value of your event

The same concept applies to events. When deciding whether to attend an event, I must weigh the opportunity cost of attending that event. What else could I be doing with that time or the money that it costs to attend? That is the opportunity cost. We weigh that against what we think we will get out of the event. This could be knowledge, entertainment, or maybe the chance to meet great people. But it’s difficult to predict how great those benefits will be. One of the best indicators that we have is price. It is a signal to us about the value of an event. This is why, if you throw events, and you believe in their value, don’t make them free.

People show up to events that they paid for

It’s that simple. Anecdotally, we hear from event organizers that free events have lower attendance rates than events with a price. In fact, Corwin Hiebert wrote a guest post on the very subject. So we decided to test this theory out. We recently held two webinars; one was free, and the other was $5 to attend. They were both focused on providing best practices in using social media for events—a topic that we know our users are interested in. Attendance rate for the free event was 38%. But for the $5 event, 69% of registered attendees showed up. I also received numerous emails from folks letting me know that they weren’t able to attend and asking for copies of the presentation or access to a recording.

A small fee does not deter purchase

I was worried that with a price associated with the webinar, fewer people would register. What we saw was the opposite. We had almost double the number of registered attendees for the $5 event. We chose not to pocket the revenue, but instead donate it to Citizen Effect, an amazing organization we’ve written about before. I’m not sure of the effect that this had on whether people registered, but we were proud to donate over $1,100 to a worthy cause.

There is something to be said for events being cost-prohibitive, but at $5 we showed that this price was not enough to dissuade attendance and may have even encouraged people to register. If you are planning a free event with a cash bar, think about charging $5 or $10 to attend and giving folks one free drink with their ticket. Get creative with what you do with the money that you collect and use it to make your event even more enticing. SF New Tech networking event charges $15, but offers free tacos.

You work hard to throw amazing events. Why signal that they have no value by offering free attendance?

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Tamara

Vice President of Marketing at Eventbrite. Interested in all things social media, especially the social part.

30 CommentsLeave a comment

  • We are dealing with this issue now but there’s a whole more to it than this post discusses.

    Among the issues:

    First, in almost all cases the free event will draw more people, your webinar example notwithstanding. Yes, the % of people who RSVP for the free event and then ultimately attend will be lower as people haven’t “committed” by buying a ticket, but the total turnout will be far greater. I know this from years of experience with real-world events. See also, the “penny dilemma”, etc. Whether or not webinars are an exception or just your webinar was an exception, I don’t know, but I can tell you for real world events the vast majority of free events outdraw paid counterparts (you can have another discussion about the quality of the attendees for each event, but I won’t digress). Of course this is all things being equal i.e the quality of the organization, reputation, look of the promotion, etc are equal. I’m not claiming more people will attend a shoddy-looking free event than an upscale-looking paid one, for obvious reasons.

    Second, the event industry has massively changed with the advent of, particularly, Facebook. Now people learn about scores of events each week. It’s much harder to draw a big turnout (hundreds or thousands of people) to big, paid events when there is so much else going on, much of it free.

    Third, you aren’t taking into account the value of the registration. We might sponsor a paid event that 200 attend and that’s all we get out of it . Or we can sponsor a free event that 500 attend and 1500 people RSVP for, all of whom have then opted into our mailing list. We can then “monetize” these people in other ways including sponsorship, advertising, future events, information products, many other ways. Moreover, we generate more buzz.

    Anyhow, there is more to this topic but it definitely isn’t as simple as is portrayed here.

  • By the way, charging a $5 fee (or other small fee) is even more ridiculous because you lose the benefits of a bigger event, more registration, more buzz, etc for a very small amount of revenue. I can see if you suggest charging a significant fee and then try to equate the event and its attendees to a luxury brand. But to charge $5 is not very much different than charging nothing in terms of the way people will view the event.

  • If you have a exclusive private party… “free” and “limited” is always nice catch. Making it to the party is another.

  • very true, in my experience it’s best to at least charge a nominal fee or at least to cover the marketing costs so you can afford to attract the right type of attendees

  • Thanks for bringing up some great points here. This is a tricky topic, and I agree that it’s not black and white. In the spirit of lively discussion, here are some of my thoughts.

    As you point out, our event was a webinar- we’ll be testing this theory with some “real-world” events in the coming months and will report back. We actually saw the number of registrations almost double for the paid event – 235 registrations compared with 92 for the free event. My hypothesis is that there are so many free Webinars out there, by charging we were signaling that our webinar was higher value. I’d hope to believe this translates to the real-world, and we will definitely test this theory.

    To your second point, I completely agree. Facebook has changed the way people share and discover events and has added a lot more noise into the system. A paid event may be one way to cut through the noise and get people to commit. After all, if you RSVP yes to 5 free events and pay $10 for another event all on the same night, which one will you show up to? To the question, why pay for an event when there are so many free ones? My theory is that with a dollar value, you signal that this event will be better than all the free ones.

    As you mentioned, events are a great way to generate leads and build an email list. I would argue that email addresses for people who actually attend your event are significantly higher in quality since the person has had a (hopefully) positive experience with your brand as opposed to someone who RSVPd “yes,” but never showed up. And to my hypothesis earlier, if you are only charging $5 or $10 to attend, then registration numbers may not actually be less.

    I do agree with Nick that if you are putting on a limited and exclusive event, free works well. By nature of it being exclusive, you are signaling value.

    My main point is that if you make your event free, you are telling your potential audience something about what they will get out of the event since there is very little else to help them gauge that before the event.

  • I’m going to continue the “mix up”. I think we all agree that value (or at least perceived value) can carry more weight when there’s a fee involved but the ultimate goal with respect to registration vs. participation is COMMITMENT.

    It’s getting harder and harder to promote an event based on its value because that’s subjective. My expectation of making a valuable contact while walking a trade show floor are very, very low; to others it’s very high. I paid hundreds of dollars to hear Malcolm Gladwell speak last month because I think he’s brilliant, not everyone felt that way.

    As an event producer one may also want to consider the value of the commitment you’re trying to illicit. For example, what if you had a business-oriented event and you decided the event was free BUT there was still a pre-event registration process where you asked a few targeted questions so that you can gain invaluable information. THEN you used that information to provide specific value before the event – like sending free downloads, special invitations, introducing them to other participants, booking a meeting on their behalf with a sponsor or exhibitor that may be able to help them with a business problem, or, maybe asking their opinions on subjects of interest that you share in your promotional collateral. All those things would significantly increase their commitment to your free event.

    I feel a sermon coming on.

  • My personal experiences disagree with what Mark says:

    When I hosted the first 4 of my evening startup chats, they were free. We got about 50-70 RSVPs for each, and saw attendance of 35 – 50 at each. For my next 4 paid ones ($20 – $30), we saw RSVPs of similar numbers (with one hitting 120) but saw attendance at about 60 – 80 (or near 100%). Now this could be because we 1) proved value with the free ones first and/or 2) by the time I was on events 4 – 8 I had shown a reputation for events that were worth the $$ you put to them. But overall, I do think you will see stronger results with a paid event.

    THAT said, it does in the end depend on WHY you are hosting the event and what it is. I think a happy hour that you are hosting for brand-recognition and email-collection in the industry should be free, esp. if a large company is footing the bill (Cisco, Oracle, Apple, etc. should NEVER charge for a happy hour). But lil ‘ol me is hosting events to share information and receive brand-recognition as an awesome event organizer, and so I will charge. I personally think an event one charges for gets a higher quality attendee group, people who come ready to network and do business to get their money’s worth out of the show. And regardless of size, THOSE are the people I want at my parties and seminars, not gate crashers who are just going to mooch.

  • I’ll just respond briefly by telling you through much real world experience (with, whether or not you want to accept this on face value since I’m posting anonymously, quality events) the number of registrations for a real world event if you charge nothing vs charging $10 is huge – literally 6 to 1 or so (ie. 300 registrations if $10, as many as 2000 if free). Yes, again, a fewer percentage of the 2000 show up – but way more in total show up than the 300 (at least double).

    With respect to your Facebook argument, yes if they pay $10 they are more likely to show up. But, again, the free event that has 6 times as many registrations will have more total attendees just a smaller attendee to RSVP ratio.

    One way to look at is that if your goal is only to make money from the events, then certainly you should charge. If you have other goals besides simply event revenue, there is a value in free events. I can tell you that doing free (mainly) free events, we recently increased our email list from 20,000 to 80,000+ and that there is a value in that.

    I’m not claiming it’s cut and dry. I’m not comfortable sending the message that our events are value-less. But i know from our online reputation that once people attend they don’t leave with that impression.

    BTW, I agree that the value of the extra 60,000 people we added may be less than the value of 60,000 paid attendees. But if you are, for instance, sending an advertiser-supported email newsletter to the list, you can honestly tell the advertiser that it’s reaches 80,000 rather than 20,000.

  • I wonder if it changes by industry. As I mentioned, Mark, with my years of experience I have not seen what your saying to be true for anything EXCEPT parties or happy hours with big name branding (FE: when Apple or Facebook or Oracle hosts a free happy hour, they get thousands of responses and hundreds who show up, which is definitely worth making it free for them. If they charges – as I mentioned in my comment that they shouldnt – I am sure these numbers would be remarkably lower). Talking with other organizers in the small business world, we have all come to agree that charging for an event has significantly more benefit and better turn-out than free. When we started charging for SF Beta, numbers continued to increase and quality of attendees improved. When I started charging for FailChats, RSVPs showed the same stable growth rate, but attendance improved.

    Despite being anonymous, I truly do not doubt your numbers at all – I believe this holds true for big-brand happy hours. But I am adding that this is not universally true. In my industry, I have not seen your numbers to hold at all.

  • Been ruminating on this since yesterday, and glad to see there have been more comments to support my thoughts.

    For me, it comes down to the event AND the organization… while free may be good for drawing large crowds, the majority of Event Organizers are relatively small organizations looking for quality exchanges.

    I run JellyLA, complimentary coworking around Los Angeles. This community service gets the mobile workforce away from isolated home offices and cafes, and into professional spaces filled with like-minded people–even if they can’t pay a day rate.

    Yes, my RSVP is unreliable. Yes, I’m sure people undervalue the service. However, we have no set structure other than: arrive, settle in and get to work, respect your neighbors.

    That said, we’re currently developing workshops which will ABSOLUTELY have a ticket price. While the intro event may be free–to draw a crowd–the remaining workshops are for those who want MORE than business cards, drinks, and surface-level information. With these events, we’re looking for an experience like Cass’s: steady growth because of our QUALITY and reliable attendance.

    Furthermore, charging a fee allows organizations like mine to put on bigger, better, and–yes–some free events.

    MY SUMMATION:

    Everyone likes FREE once in a while and it will draw a nice crowd. Regular ticketed events–with the quality and value to back up the fee–build more credibility and stronger community long term.

  • Well, it’s an interesting discussion. I *do* throw happy hour-type events in a number of cities and while we are certainly not a big name like Apple, etc, we have enough credibility that people know the events will be good. Maybe that is the recent for the distinction.

  • This is an interesting discussion, These days I’m thinking paid is better for my events,
    Technical Training classes, we also have only 2 prices and Regular Price, and a discounted price for a non profit organization.

    I don’t bargain, as in: I’m a student, I’m a senior, I’m unemployed, (NO Discounts)
    We are a businesslike any other.

    Appreciate you thoughts

  • Trying to register for event, keeps telling me I haven’t completed form when I have. Guess I won’t go to the work shop.

  • Sorry to hear that. Can you specify the event? Or feel free to run through the issue with support: 800-350-8850.

  • Interesting post… We’ve noticed similar rates of attendance at our free and paid events. My organization, Iris Reading, teaches speed reading classes and sometimes hosts free workshops. When we do host free events, we notice a similar attendance rate, at about 40%. Our paid events, which cost a few hundred dollars, as you would imagine, are above 90% attended.

  • Your arguement reverses cause and effect. The price is an INPUT into the value calculation, NOT the output.

    If the same product is priced at two different points, obviously the lower point provides the greater value. I’m not aware of an economic theory that suggests otherwise!

    I think you’re missing a much stronger argument to charge: namely, that charging, increases your promotional budget — a budget that can then be deployed to generate additional registrations.

    Unless we’re talking ticket prices of more than $100 or so (in the Western world), the real cost of attending an event is NOT the ticket price, it’s the time commitment. All this talk of perception is obscuring the real issue and the real opportunity.

  • Several people are disagreeing with the original post based on their real-world experiences, but our real-world experience has lined up exactly with what the author said. People were much much more likely to flake on a free event. Having a nominal fee of $10 to $40 did not hurt interest levels in the least (sometimes the opposite) and always reduced the number of flakes, because people had committed. Responding to Justin, I think the issue is *perceived* value rather than actual value. Of course the same workshop for free is a better deal, but people maybe subconsciously equate low price with low value.

  • This is a great discussion, especially for me as I’ve struggled with this issue. I think it really comes down to this as far as I’ve seen it: If your content has value (training, etc.) then charging for it ensures you are compensated for creating that value for attendees. On the other side, if leads or prospects are more important, then a free event is in order.

  • For as l’ve seen it if your content has a value training etc ensure you are compensated for creating that value for attendees.

  • well it is aright sometime to get into a little action with out having to come out pocket when u have a flyer stating somthing free that what you expect

  • Re Justin’s comment (belatedly), yes you have a higher marketing budget if some revenue is flowing in. But people will market a free event for you much more broadly virally, using social media, etc.

    I also think people keep missing the point about “flaking.” Yes, more people will flake out and not attend a free event they RSVPed for. But, generally speaking (at least for social / networking events), the total number of attendees will be greater and the members added to your database will be greater. If having bigger events and increasing the size of yoru database is important to you, I’d advise you to consider big events.

    I’d personally rather have a 500 person event than added 2000 people to my mailing list (1500 of whom flaked) than a 100 person event at $15/ person where 125 RSVPed (and 25 flaked). But maybe that’s just me.

  • For what it’s worth I think charging is part of the qualification process and that a person committing to pay to attend an event means that they are partly open to a further purchase either as a result of attending or at some other time.

    I’m interested to hear if anyone has actually done any research as to why people don’t turn up to free events and compared that to why they don’t turn up to paid for events? Is there any difference at all?

  • Something that was free–and pretty valueless–now becomes the object of your customer’s desire.
    What’s more, they don’t just want your offering. They want it now. Like yesterday.

  • Free events will bring in the foot traffic, if its something they want (or feel they need). However, you have to “hook”em first. Haven’t seen any research, but as PR director for my church, we constantly struggle with this issue. Paid versus free-will (donation based).
    Will keep looking, would be interested in that data.