Updated Nov. 5, 2020.
Digital events will continue to dominate the meetings industry over the next few months and into 2021. According to research from Northstar Meetings Group, 72 percent of planners do not expect to go to any in-person events this year, and only 15 percent plan hold face-to-face or hybrid gatherings in Q1 of 2021.
Although it's clear that virtual isn't going anywhere, many meeting professional are still trying to work out how much they should be charging for online gatherings. It's a topic that raises a number of other questions around pricing strategies, such as whether your attendees will be willing to pay even close to what they paid for an in-person event when it's now online-only, whether more content needs to be added to justify the price, and if the same price should be charged for all attendees. Also at issue is whether sales tax should be charged.
To help answer these questions, we drew on insight from experts in events and pricing strategies, as well as sales tax for live events. Among their suggestions:
Don't Call it "Free"
During the webcast "Pricing and Sponsorship for Virtual Events," part of 360 Live Media's Event Innovators Exchange series of webcasts, Beth Surmont, director of experience design for 360 Live Media, outlined strategies for pricing and other monetary questions related to events. She urged planners to eliminate the word "free" from their marketing language. In part, this is due to financial necessity: Organizations must seek some ways to recoup money lost from their in-person events that have moved online. But it's also because, as Surmont put it, "meaning comes from sacrifice."
"Your event has value associated with it," said Surmont. "If you just put your event online and don't charge anything for it, it loses some meaning in the eye of the attendee."
But Surmont clarified that that does not mean a planner has to charge a registration fee. An organizer can say it has a "$100 value," for instance, but attendees will not be charged because that was underwritten by the sponsor, covered by a grant or provided due to the generosity of the host. Or attendees might view the program free of charge by doing something in exchange, such as watching a sponsor video or taking a meeting with a supplier (following the hosted-buyer approach). The point is, while it may not cost participants to attend, it is not "free."
Consider Attendees' Situations
Surmont acknowledged that with this situation evolving so quickly, there are no set best practices when it comes to pricing.
"We're seeing everything from free events to those that are their original registration rate — and everything in between," she said.
360 Live Media's Beth Surmont offered up tips and creative ways to connect with remote attendees at Northstar Meetings Group's recent webcast, Boosting Audience Engagement at Virtual Meetings. Watch on-demand
For that reason, it is important for planners to consider the specific situation of their audience when determining a price. Some industries or specific roles have felt only a minimal impact, without high numbers of jobs lost or furloughed, while others have been severely debilitated. While an event organizer for a stable industry could reasonably charge a few hundred dollars to attend an online conference, one aimed at an audience where companies are freezing spending and there are extensive layoffs could not in good conscience (or good business) expect attendees to spring for the cost of a pricey webcast.
In cases where it's hard for an organizer to generalize about the financial situation of attendees, Surmont suggested considering a "pay what you can" policy.
"If you can pay a little bit more, that's great and it means you're helping somebody else," she said.
Determine if Sales Tax Should Be Charged
Sales tax must be taken into consideration when pricing a digital event. While in-person events are relatively straightforward (taxes are charged based on the rate of the state in which they're held), it's more complicated for virtual events, varying by state and size of the event. Most small virtual events won't meet the economic threshold for annual revenue to be legally obligated to collect sales tax. Swoogo, an event-marketing platform, offers a state-by-state guide for these revenue thresholds, which generally range from $100,000 to $250,000 (with the exceptions of Oklahoma, Pennsylvania and Washington, where the threshold is just $10,000).
A planner will also have to take into account the relevant states' "economic nexus" rules — the guidelines that dictate how much "activity" a business must have in a given state in order to be expected to pay sales taxes there. That activity could, for example, be based on the number of transactions or amount of revenue generated in that state.
"So even if the event planner is located in one state, they could be required to collect and remit tax in a different state even if they never set foot in that state," said Ken Webster, head of research at tax consultancy TTR Inc. "These economic nexus rules are usually tied to number of sales [events] and/or total receipts [dollar amounts made in that state]. The larger the event, and the higher the revenue, the more likely it is that the event planner will need to know the sales tax implications in every state where the event 'takes place.'"
The Sales Tax Institute offers this helpful FAQ that delves more deeply into questions related to the sales tax nexus for different states. Some states' tax services based on where the benefit from the service is received (aka where the attendee is located), while others might tax based on where the host is based. Once you've addressed where the event took place, you have to figure out how the state categorizes what the event planner is offering.
"One state might consider your event an admission to a taxable entertainment event," Webster explained. "Another might consider it a nontaxable service. And still a third state might consider the event a sale of software. Since the event takes place online using software that's accessed over the internet — a state might consider that the [gathering] is not an event at all, but a sale of software."
Sales-tax requirements could also be affected by whether the event constitutes online training and/or whether goods are shipped to participants as part of their attendance.
"What is taxable in one state could be completely different in the bordering state," added Jordan Perri, a tax manager with Allyn International. "Shipping tangible materials (and in some case digital materials) to an attendee's location in another state could create tax obligations in that state if enough sales are made to participants in the state. Even without the distribution of materials, sourcing rules can create these issues with just simply attendance alone."
As Perri put it, planners should conduct "individual research on the specifics of the event and applicable taxing jurisdictions" to ensure they're following the rules.
Look for Value-Adds
Surmont emphasized that in conversations she and other members of 360 Live Media have had with those in the market, many expect to pay for virtual events — as long as they get plenty of value in return. She suggested that organizers look at all the assets they have — publications, videos, online communities, research — and consider including that with the webcast as part of a full content package that the attendee would be purchasing.
"Now is the time to think about what you have at your organization and what you can leverage," said Surmont. To do this requires getting past the silos.
"This is only going to be successful if you say, 'let's lay everything out on the table and figure out how we're going to make these things fit together,' and determine what value you can provide," said Surmont.
Don't Get Stuck on One Rate
Surmont urges getting experimental with traditional pricing models. For example, ask, "what's earlier than the Early Bird Rate?" Rethink the usual tiers. Or take the registration rate for the in-person event and cut it in half for virtual, while keeping your audience's situation in mind.
"You don't have to just put one rate out there," said Surmont. "You can try an early bird price and if people aren't picking up on it, then it's going to tell you that you might have to discount it."
Promotions such as buy-one-get-one-free, flash sales or premium rates can all be tested. The more time you have before the event, the more opportunity to experiment with the price to find a sweet spot.
"Or think about offering a subscription model to attendees," Surmont suggested, in which a set monthly or annual fee grants an individual full access to all of an organization's virtual events or content, or a certain tier of access. "The idea of consuming content from a screen within my home," Surmont points out, "is one that lines up with Netflix."
Or take a cue from Spotify or Hulu: Each offers a a more expensive premium option that can be enjoyed ad-free or includes additional content.
"Take those ideas and models that are out there and think about how they could work for your events," Surmont advised.