Pricing. A tough topic in any business and can cause disastrous consequences, whether you have an outstanding product/service or not. We are going to go through the key topics of ticket pricing for a competition business.
A range of beginner topics like instant-win vs longer competitions to break-even calculations will be discussed. It’s essential you understand these topics to master the competition industry and earn maximum entries for your competitions.
Why the Right Pricing Strategy Drives More Entries
Attractive pricing can cause a spike in sale volume. If you pick a price that is a good deal for the customer, they’re likely to refer your competitions to their family and friends. In turn, creating a spike in ticket volume.
However, pricing too cheap can backfire, causing a concern for your bottom line. This is emphasised by payment providers taking a cut of the ticket price, which we will explore further in this blog post. The benefit of a cheap ticket is that it often causes more sign-ups on the website, increasing your brand awareness at the start of your business journey.
We always recommend lower prices for the first competition, to gain a bigger audience for later competitions where you will be charging more. The price of a competition benchmarks the customer’s expectations for the competition, if you are charging a fair price, they will see the competition in a better light.
Segmenting Customers: Matching Entry Cost to Perceived Value
As with any business, you need to understand your target market to price the product correctly. There are multiple methods to find the perfect price. Most of them are outlined in Attest’s study, where they take thorough testing strategies and explain them simply for beginners to understand.
Segmenting your audience by budget and price sensitivity can be a good way to overcome pricing worries. Surveys and analytics can be used to diagnose if your customers prefer cheap “impulse buy” tickets or, if they’re willing to pay for longer-draw, higher-payout competitions. You then have to pick out common demographics, such as age, gender, income from each group of survey takers. Next, craft specific social media marketing campaigns to target each demographic and price according to their survey / website analytics results.
By crafting competitions for each segmented audience you will be able to satisfy all users. This can be made even more effective with A/B testing which we will cover later.
Calculating Break‑Even and Profit Margins
Let’s say you’re planning a competition with the following costs:
Fixed costs (marketing + platform fees): £250
Ticket price: To be calculated
Variable cost per ticket (payment processing + VAT): £0.25
Projected ticket sales: 1,000
Average tickets per customer: 5
Plug into the formula:
(Fixed + Variable × Projected Volume) ÷ Projected Tickets = Base Price
→ ( £250 + £0.25 × 1,000 ) ÷ 1,000
→ ( £250 + £250 ) ÷ 1,000
→ £500 ÷ 1,000 = £0.50
This means you need to charge at least 50p per ticket to break even — assuming you hit 1,000 sales.
We’d recommend estimating these figures before setting the price for your competition to ensure you will at least break-even. Each business is going to have differing payment processor fees, marketing costs and projected ticket sales. It’s important that you work out this calculation using the formula provided for your own business.
Top Ticket Pricing Models for Competition Websites
Low Pricing Model
If you’re looking at a competition website with this pricing model, you are going to be hard pushed to find any ticket that sells for more than £2. The majority of the ticket prices for each competition will be below £1 and sometimes as low as 20p. This does come with a risk of making a loss due to payment provider fees, which we will explain below.
This has became a popular pricing model and it is our recommended model. It doesn’t always work for fresh competition businesses as it is slightly more risk. Higher fees are expected with the low pricing model because you are processing more transactions.
Traditional Pricing Model
The traditional model is best suited for businesses who don’t have a lot of capital to waste with a high-risk business plan. These competitions often focus on ticket prices that are closer to £2 and can often be higher if the value of the competition prize is significant.
With the big players in the competition industry now offering villas in foreign countries, I think this model will become more popular for such competitions where its too risky for a small business to offer 20p entries to villa competitions (if they can afford the villa to begin with). In our opinion its best to start with a traditional pricing model, then once you build your audience move to the low ticket price model.
Psychological Pricing Hacks to Boost Entries
Charm Pricing & Price Anchoring Strategies for Ticket Pricing
Psychological pricing can enhance your sales volume by increasing the perceived value of competitions. The buyer is always going to try to pick the best competition for the lowest price, but you can manipulate this. The classic charm pricing of “99p” vs “£1” still works well, especially for lower priced tickets.
It’s always worth a try and you will only lose 1p per sale, which you may calculate it to decrease your profit margin, however you have to take into account the number of tickets sold due to charm pricing “99p” vs “£1”.
Charm pricing can be used in conjunction with price anchoring. A ticket price of “95p” feels cheaper than “£1”, by displaying the discounted competition next to the discounted “99p” entry, you can draw more ticket sales because customers think they are getting a great deal.
Scarcity Tactics & Limited‑Time Competitions
Emphasising the element of scarcity is one of the best psychological pricing hacks. It’s used around you all the time and is especially common in email marketing. If you put your mind to it there are many ways that advertising the scarcity of tickets can be achieved.
One of the most common ways on a competition website is to show the percentage of tickets sold for each competition. Using this helps to promote users into buying incase the competition sells out and provides social trust. If others are buying it, it must be good! 7 Days Performance do it well on their website:
Time-based psychology hacks are important to boost entries as well. In the competition industry its even more prevalent than promoting the scarcity of the competition. As a lot of competitions don’t sell out, its tough to promote the scarcity consistently.
However, it’s much easier to employ time-based psychology because a competition will always end at a given time, no matter how many tickets have been sold (for most competitions anyway). Click Competitions does this the best, they have a “DRAW TOMORROW” banner in their accent colour to make it obvious that the competition is nearing its end date. Thus, enticing buyers to make their ticket selection quickly before the draw.
Again, 7 Days Performance carry out time-based psychology hacks, but they focus more on social media, as they have amassed over 242k followers on Instagram alone! It’s fair to say that you’re not going to scroll past “MAJOR MULTI WIN UPDATE”, without taking a read.
Key Tip: Don’t overdo the time-based psychology hacks on social media, or your followers will quickly catch on and scroll past your posts, limiting the impact of your social media permanently.
A/B Testing Your Ticket Prices for Optimal Results
Outline split‑testing £0.50 vs. £1.00 launch prices or instant‑win vs. longer draw fees. Define clear metrics (entries, revenue, multi‑ticket purchases) and tools (Google Optimize, Optimizely). Emphasize statistical significance before rolling out winners
If you’ve reached this point in the article and you’ve not decided your ticket price, A/B testing is for you. As stated by Optimizely A/B testing is used “for comparing two versions of a webpage or app against each other to determine which one performs better.” You can read more about the A/B testing methodology in general with their in-depth article.
A/B testing can be used in a competition business in many forms. The first one we will explore is instant-win vs longer draw fees.
Instant win – Often used for smaller prizes, the customer finds out if they have won instantly via an automated system.
Long draw – A traditional competition draw, often live streamed for high-priced items that require a significant number of tickets to be sold to break-even.
It may be more beneficial for you to run instant win competitions over traditional competitions. However, you will not know until you compare the customer response and sales data using A/B testing. The factors you need to compare is general response via customer feedback, how many tickets are sold and your profit margins.
A/B testing should also be used for ticket pricing too, comparing the same factors. Our latest competition website client, SuperSport Competitions used this strategy to test whether better odds beat a better ticket price in terms of perceived value by the customer.
In this instance the current competitions are very similar, however better odds does seem to be favourable. This would need to be tested over multiple competitions and use more comparisons than the number of tickets sold. But, its a good starting point for a new competition business.
Payment Provider Fee Consideration
If you’ve now decided that low price tickets is your preferred pricing strategy, you also need to consider what fees your payment provider charge. If you’re having issues with choosing a competition website payment provider, check out our payment provider guide which outlines our top picks after working on competition sites for 5+ years.
Payment providers often charge a fee per transaction at a minimum of 10p + VAT. If you’re aiming for ticket prices to be less than 50p and a customer only buys one ticket you are at risk of making a loss depending on your payment provider’s terms and conditions.
Conclusion: Fine‑Tuning Your Strategy for Maximum Entries
In conclusion, you need to test what works for your business. There is no one strategy that works for all unfortunately. Data-driven decisions through website analytics, user surveys and sales data is the best way to proceed. If you’re looking for further support setting up a competition website, feel free to contact us.
