Knowing how to price event space can be tricky to get right. Guests expect good value, which is essential to offer. Doing so will help drive repeat business and attract more bookings. At the same time, you want to ensure you operate profitably and make the most out of hosting events at your venue.
Whether you plan to rent out a unique venue for large events or offer private dining experiences in your small restaurant, there are many factors to consider when pricing your space. We break down everything you need to know in this guide.
Importance of Transparent Pricing
Being transparent about pricing is essential for securing event bookings. Offering a simple pricing structure that’s easily understandable helps to create a more positive customer experience. It also builds trust with clients, in turn generating more bookings.
Here are some of the main reasons why your event business should offer clean-cut pricing strategies:
It Offers Clarity and Builds Trust
Transparent pricing clearly communicates the cost of the event venue and any associated fees. This helps build trust and reduce confusion with potential customers. They can see exactly what they’re paying for without asking for more in-depth information.
Enables Comparisons
Transparent pricing makes it easier for clients to compare prices and options when looking for event spaces. This helps them choose the venue that offers the best value for their money.
Sure, it might feel like the wrong approach to make your prices visible against your competitors. However, potential customers will appreciate it as they can decide at a glance which offering provides the most value based on their needs.
Helps Clients With Budgeting
Clear pricing helps clients accurately plan and budget for their events. This reduces the risk of unexpected costs cropping up and helps them stay within their budget. In turn, the person can be more confident about holding a successful event at your venue.
Saves Time for Your Sales Team
Say you remove price lists from your website. A potential pitfall is that your sales team might spend excessive time handling inquiries from prospects whose budgets are below your minimum pricing.
So, while hiding prices can generate more inquiries, they might be of lower quality. It's better to have your sales team focus on more qualified leads in a lower volume instead of a large number of unqualified leads.
Demonstrates Value to Your Clients
Clearly displaying venue prices on your website helps communicate the space’s value to potential customers. Provide a detailed explanation of what your services include so it’s easy to see the benefits you can add. It also serves to justify your pricing, as customers understand the level of work you provide from the outset.
Scoop up More Website Leads
Many people don't want to go through the process of discussing costs with a salesperson. Instead, they want to know how much you charge from the outset and make a booking based on this.
Failing to display prices on your website can also cause potential clients to turn to competitors. By listing fees, you simplify the buying journey and efficiently weed out unqualified leads.
How to Price Event Space: General Considerations
No matter what kind of venue rental you offer, here are a few critical costing considerations to keep in mind:
Include the Cost of Your Time
When pricing an event venue, always make room for the cost of your time spent managing and organizing events. Doing so ensures you’re appropriately compensated for the effort you invest in making every special occasion a success.
Don’t Make Price the Biggest Competing Factor
When considering how to price your event venue, don’t focus too much on matching what other venues are doing. Sure, this does matter, as you do need to be competitive. However, this shouldn’t come at the expense of sacrificing quality in some areas.
For example, you might consider reducing the size of your event management team to implement savings. However, this could result in a less-than-top-notch customer experience, impacting your business reputation.
Low prices can also make it difficult for you to cover your costs and maintain profitability over the long term. Furthermore, if you are known solely for offering low prices, customers could perceive you as a low-quality provider. This might make them hesitate to choose you.
The trick is to find the balance where service fees reflect the value you offer while being in a suitable ballpark of your top competitor’s prices.
Keep Prices Consistent
It’s important not to adjust prices based on the customer when pricing an event space. Doing so can lead to a lack of trust and credibility. Customers want to feel like they are being treated fairly and consistently. If they sense that prices are being adjusted based on their perceived willingness to pay, they may feel they are being taken advantage of.
Adjusting prices based on the customer also makes it difficult to maintain a consistent pricing strategy. This can result in all kinds of issues for your sales team and your bottom line. By having clear, consistent prices, you are set to build better trust with customers and ensure everyone is on the same page from the start.
Types of Pricing Methods
There are a couple of different approaches you can take when determining the rental price of your venue. The decision you make should depend on what kind of venue you run, what type of events you cater to, and what services you offer.
Here are a few different methods for pricing packages and event rentals:
Flat Fee
Many venues offer a flat rate for renting out their space. This is a straightforward way to price event venues, where you just have a fixed price available for hiring out your space, with no additional fees.
Of course, your flat fee can differ based on factors like the day of the week, the time of the rental, the season, or how long the venue will be required. Many venues will simply offer a full-day rental at a set price. Or, they offer the option of a half-day or full-day rental.
Hourly Rate
Offering an hourly fee is another good option for pricing your venue as it offers more flexibility to your clients.
If you take this approach, it's a good idea to include a minimum spend. You don’t want to rent out your venue for two hours but spend an extra two hours cleaning and preparing the venue that you don’t get paid for.
Pricing Based on Sales Data
Event spaces that are used for regular dining (i.e., the buyout of a restaurant) should be priced based on historical sales data and marked up from there. Take a look at your event analytics to determine the figures and ensure you don’t miss out on revenue when hosting events.
A good strategy is to determine what you would normally do for a service based on the day of the week and month. Mark that figure up by a certain percentage (it could be around 10% - 20%). This will help you determine a buyout fee that would be a food and beverage minimum, or a food and beverage minimum plus a room rental rate.
Packages
Another pricing method to use is offering set packages. This is when you include the venue rental price and your services together. For example, offer your venue for a full day and include a set menu and staff.
Clients might feel like they get a better deal this way, as they only have to pay one price for everything. It also helps you save time and make more money, as you can sell extra services to the client but keep it included in a set price.
Set packages are also useful for marketing strategies for venue hire. For example, offer a special “fall wedding package” or an “end-of-year corporate event package.” It’s a great way to increase venue bookings during slow seasons.
Specific Pricing Information For Different Venue Types
Having a simple pricing structure that captures the optimal value for your venue is key to a successful private events business. While every space is unique, different venue types typically work best using certain pricing strategies.
Besides your sales data, operating costs, and profit margins, the price you charge for your venue can vary greatly. This could be based on factors like your average ticket price, how established your business is, your location, or if you want to utilize the event for brand awareness.
To help determine a rental price that makes sense for your business, here are a few strategies different venue types can take:
Food and Beverage-Based Venues
In this case, we recommend using minimums. This is so that you don’t put a cap on the amount of value you can capture, but at the same time, don’t scare away groups who won’t pay a small room fee.
A good strategy would be to offer a pricing table based on the number of guests (room size) and the day of the week. For example, it could look something like this:
This way, you can offer better value in your rental price and make it flexible to your clients needs, without sacrificing on profits.
Of course, this strategy works best if you section off certain areas in your venue. If you have a small group booking, they could take a private room while the rest of your restaurant still functions as normal.
Private Dining in a Restaurant
If you offer private dining experiences in your restaurant, you probably want to establish a minimum price for the space required and include this in the private dining package.
For example, you don’t want to lose money closing off a room that can hold 50 regular diners if you’re hosting a private dining event for five people. In this case, set a minimum room charge to make up for the revenue you typically generate based on sales data. Then add a private dining package on top of this.
If the private dining package includes a customized menu that requires extra work, be prepared to charge for this. Offering set menus that clients can choose from is a good idea, as this helps them get easy access to your food pricing.
Of course, the minimum charge for a private dining space can be reduced depending on the number of diners. If the diners take up your whole space, you don't need to charge extra. Instead, charge a premium on a special private dining menu.
Unique Space Rentals
Charging room fees is a great strategy for space rentals. In most cases, this would be charged by the hour. However, if people typically rent the venue for day-long time frames, charging by the day may be better.
This works well, as you’re only renting space, so you can easily offer it at a flat rate. Again, try to offer this through a pricing table based on factors like the size of the space and the day of the rental.
Special Venues
You might run a special venue, like a bowling alley or an art gallery, which you offer for private events. In this case, you don't make normal revenue from selling food and drinks. Pricing your venue in this scenario would work well by offering a flat rate for your space.
You might have multiple spaces available (such as golf courses or hotels). In this case, determine flat rate pricing based on the size and value of the space and how much the space will cost to maintain. For example, a garden with a swimming pool will be more expensive than a bare room.
Again, go back to your sales data and determine averages based on the day and time of year. Add a percentage to this to figure out how much to charge for the use of the space.
Additional Considerations
To make sure renting out your venue is profitable, here are a few important considerations to keep top of mind:
- If the space is usually not full, base the minimum off of your costs to open
- If the space is usually full, base the minimum off of your projected revenue at that time
- Here is a formula to use as a rough guide to room minimum calculation: (# of guests the room can hold X average estimated revenue per guest) - Perceived Marketing Value = Room Minimum Estimate
- Having people visit your venue is some of the best marketing you can get! So don’t be too hesitant about offering your venue for events - you can attract more customers
- You can always adjust your prices based on demand
- These prices don’t reflect wedding prices which often carry a higher price tag due to the additional requirements
Pricing Extras and Add-Ons
Adding extra services, like offering your own food, a co*cktail bar, or entertainment, can be a great way to generate more event bookings. Here are a few things to consider when pricing extras and add-ons for events held at your venue:
- Cost: Determine the cost of the extra or add-on, including any materials, labor, or other expenses required for the add-on. Add a profit markup that makes sense for you
- Market Value: Research the market value of similar extras and add-ons in the event industry
- Value Proposition: Consider the value that the extra or add-on brings to the event, such as increased comfort, convenience, or aesthetics. High-value items can be priced higher
- Bundle Options: Consider offering bundled options that include multiple extras or add-ons at a discounted rate to increase value for the customer
Pricing Rentals
Offering additional rentals, like decor and furniture, can also be a great way to maximize profits for events. When doing this, always have a set price for each item you rent out.
Consider the cost of the equipment and how much it would look like to repair, maintain, or replace - factor this into your pricing. You can also offer discounts or special promotions based on the event type or rental bundles the client chooses.
Conclusion
Accommodating event bookings is a great way to drive more revenue for your venue. However, you need to be smart about what you charge. This is so that you attract the right clients, provide a great service, and are compensated in line with the effort it takes to run the events.
Hopefully, the tactics above give you an idea of how to approach the pricing decision. By keeping it simple and transparent, you’ll be better set to add value and grow your business.
Perfect Venue’s event management software can help you build comprehensive pricing packages for your event venue in a matter of clicks. Get your free 14-day trial of our premium plan to see how our software can help grow your business.
