The Right Price for Your Target Audience

If you want to finance your initiative or project, there are several options available. It’s best to have a combination of multiple sources of income, because if one of those options proves insufficient or is no longer available, you’ll still have a chance of success. For example, you might apply for a grant or fund, and you can try to secure sponsorship. It’s also a good idea to generate revenue from your audience. However, it’s not always easy to set the right price for your target audience. On this page, we’ll help you get started by highlighting a few things to keep in mind. Ultimately, of course, it depends heavily on the type of initiative or project you’re working on.

Take a close look at the product you're offering.

It’s very important to take a close look at your own initiative or project. Ask yourself what the actual product is that you want to “sell.” The pricing you set also reflects its value and can influence how people perceive it. It also has to do with what people are willing to pay for what you’re offering. To illustrate: people are generally not willing to pay more than €10 for an art exhibition (anything more is perceived as expensive), whereas a pop concert costing €10 is considered cheap. The same applies, for example, to prices in the hospitality industry. At an art exhibition, people tend to eat and drink less than at a music festival. This means that visual arts are often more dependent on subsidies. At a free festival, people feel they should be allowed to bring their own drinks. At a festival where admission costs €40, the audience often doesn’t hesitate to pay nearly €3 for a beer. These are interesting dynamics that shape the revenue model of your initiative or project.

Cost is very important

For many people, cost is an important factor in setting prices. Ultimately, you want to cover the costs of your initiative or project; otherwise, you’ll operate at a loss. Therefore, always make a thorough cost calculation for your product(s) or service(s). If you have sponsors or a grant, subtract those from the total costs first. What remains is the portion you need to cover with revenue from the public. This can come from various sources, such as ticket sales, revenue from food and beverage sales, the sale of merchandise or replicas, or, for example, revenue from restroom and coat check fees. When setting prices, also take into account the sales tax you’re required to charge. This must be included in the selling price of your product or service.

Take a close look at your target audience

When setting the right prices, the target audience is also extremely important. If certain items are too expensive, too cheap, or out of proportion to what you’re offering, this can detract from your audience’s experience. It’s also unpleasant to receive feedback afterward—for example, via social media—that your initiative or project was far too expensive. This could lead other visitors to ignore your initiative or project next time, or cause you to develop a bad reputation. You can sometimes prevent this by asking your audience for their opinion through a questionnaire or survey. You can also try to pick up on these signals during the event and, if possible, respond to them immediately. Therefore, always conduct as comprehensive an analysis of your target audience as possible. Pay particular attention to socioeconomic characteristics, such as spending patterns, income level, and, by extension, factors like age. A student will generally have less disposable income than a single adult with a full-time job.

Buying expensive is actually cheap

Okay, this proverb might be a bit of a stretch here, but what we’re trying to say is that you shouldn’t always aim to squeeze every last drop out of things. For example, you could choose to charge a bit more for a ticket so you might make a little more profit. That might bring you more financial success in the short term, but your audience might find it a bit too expensive and decide not to come back next time. In addition, in some cases it’s a good idea to charge a little less for one thing (such as admission to your show) or even offer it for free, so your audience has more money to spend on other things like food and drinks or merchandise. There’s also a chance that your audience will grow in size, which means you’ll recoup the lower admission price through increased attendance.

Subsequent valuation

In the cultural sector, you sometimes come across the term “post-event valuation.” This means that after a performance, for example, your audience gets to decide for themselves what they think the performance is worth. You’ll often find that you end up with more money this way than if you’d set a fixed admission price. Of course, this is especially true when your initiative or project is of high enough quality. This is because people are in the right frame of mind and sometimes feel a bit of peer pressure. There will certainly be people who think they’re getting a bargain, but they’re often in the minority. A downside of this is that you can never accurately estimate your revenue in advance. That makes it difficult to factor this into a grant or fund application.

If, from your expertise, you yourself have knowledge that would fit this topic, or if you see opportunities to improve this text, we look forward to receiving your message at info@cultuuracademy.nl.