From sponsorship packages to specialty services and ticket costs, pricing is a topic that you could talk about all day long. It’s one of the most common questions I get.
The thing is, you’d almost never be right or wrong. That’s what makes it hard.
If you’re wondering how to price things when you’re just starting out, you have two choices: high prices or low prices. If that seems too straightforward to you, you’re a smart cookie and that’s why I like you.
But you’ll still have to pick a strategy and build off that. Here’s a quick overview of the pros and cons of each one:
Low Pricing Means:
- You’ll have to get to your ‘number’ by volume, but your tickets, or sponsorship packages, might be easier and faster to sell.
- However, you’ll have to work with more customers to get your number, and that requires juggling – not a bad thing, but also not everyone’s strong suit.
- Lower investments require less commitment and perceived risk from your customer. But with less commitment comes, well, less commitment. You’ll likely have higher turnover.
- You’re associated with lesser value, and you’ll be able to provide less value. That’s not to say that you’re less valuable, but you may not be able to afford to provide a completely satisfying service for your customer.
High Pricing Means:
- It generally takes longer to nurture a higher-paying customer or sponsor than it does a lower-paying one. They need more information, more trust and more value.
- On the other hand, higher-paying customers tend to be more loyal and committed – they generally stay with you longer. They trust you, they’ve invested in you and your program, and they see a long-term relationship.
- While the relationships take longer to build, you’ll need less of them to reach your goal.
- With higher pricing comes the opportunity to provide a better service – you can afford to reinvest a portion of the investment back into the customer experience. That goes a long way in building a long-term relationship.
- Once you’re associated with a high value, it becomes easier to maintain that expectation.
(Note: Like every other interaction you have with your audience, your image and persona should match your pricing, and vice versa.)
So how do you decide when you’re just starting out, or moving from one level to the next?
Ask yourself: Are you comfortable with getting more in-depth and building your customer or sponsor base over a longer period of time, with fewer people? Or are you willing to work with a higher volume of people for less money individually?
I’d encourage you not to get too tripped up by pricing. A price doesn’t come with a wedding ring; you don’t have to keep it forever.
The great thing about racing is that we’re constantly getting a fresh start.
Each event or season is new for us, and it’s an opportunity to assess where we are and where we want to be. If you can’t get off the ground without a customer, you might consider lower pricing. Or if you’re new to the business, you’ll need to start at the low end, too.
But each time you start fresh, whether that’s a new customer or a new season, you can refresh your pricing. Each time you master a task and learn how to provide more value, you can bump your price up a bit for the next opportunity.
Since you’re not the type to stop improving, you’re prices shouldn’t either.
P.S. I’m in Indy at the Performance Racing Industry Trade Show right now and I’ve gotten to sit down with some of the DirtyMouth community. It’s been so wonderful meeting smart, passionate people who are looking to grow our sport. I’m grateful for the opportunity to connect with you!