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?