The Hidden Cost of Free Events

10 Aug

According to the folks over at Eventbrite, hosting free events is a bad move.  In a post on their blog, they say that making an event free signals that is has no value, and will actually discourage people from attending.

This is interesting food for thought.  Their argument is grounded in economics –  the elusive “Giffen Good” (a type of good that has never been proven to exist, and which defies the Law of Demand, but still…) – and the results of a simple experiment seem to support this theory.  They created two identical webinars on using social media to promote events.  One was free; the other cost $5 to tune in.  Only 38 percent of those who registered for the free event showed up, but the attendance rate for the $5 event was 69 percent.

A guest post on the blog from  Corwin Hiebert (“who specializes in strategic event design, marketing, and creative talent management”) says a lot of the same.  Some highlights:

I’m convinced that the most offensive word in the event business is “FREE”, specifically when it refers to free admission for an event. Unless you’re new to capitalism, I think you’d agree that the word “free,” more often than not, communicates a lack of value. Whether or not an event can handle a zero-dollar ticket is often beside the point. What is, in fact, being communicated when no monetary commitment is required for an event is that expectations should be low.

When someone registers or plans to attend an event that is free they automatically assign that activity the category of “maybe.” If they are not liable for not showing up then it’s no big deal in their eyes. But it’s a big deal for you, the event planner. Your event plan can be seriously impacted when attendance is such a variable.

He cites Facebook as an example, saying, “It’s a miracle if even 1% of the confirmed attendees show up.”  A lot of people have a tendency to click “attending” or “maybe attending” if a friend invites them to an event, even if they have no intention of actually going.  Event hosts do the same thing, inviting every single one of their Facebook friends when they set up the event. (“No, Guy I Haven’t Talked To Since High School, I don’t care that your garage band is playing in Wyoming this weekend.”)  Event sharing is great, but without a way to filter events down to the ones your friends are attending or those that match your interests, it quickly becomes just another kind of digital clutter to tune out.  There’s no way to separate the events you’re most likely to want to attend from the rest of the crowded online landscape.  At the end of the day, Eventbrite isn’t wrong, just mistaken.  Paid events show commitment and a sincerity of intention to attend, and as Hiebert says, allows you to avoid the pitfalls of having to discount remaining tickets at the last minute to fill seats.  Still, with an effective filtering and recommendation system, I think event hosts could achieve the same sort of relevance and level of commitment for their free events.

What do you think?  Is this theory just a way to sell more tickets to more events, or are they on to something here? When you see that something is free, what do you expect from the event?

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One Response to “The Hidden Cost of Free Events”

  1. Theo August 10, 2010 at 6:29 pm #

    Very interesting post, Steve! Good to get your take. Definitely a ton to debate on the free vs. paid dilemma.

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