How conference pricing works (and the "Conference Food Chain" concept)

“What does a conference cost?” is a simple question, but the answer can be complex.

The cost to attend investment management conferences and events varies significantly by factors such as:

• Amount: the cost to attend can range from free or nearly free, to thousands of dollars.
• Openness: anyone can register for some events. Others are “invitation only” and require potential attendees to request to attend. Some are “member only”, requiring paid membership to a group.
• Pricing Tiers: for some events everyone pays the same price. At others, different attendee types pay different prices.
• ‍Transparency: pricing for most events is publicly disclosed, but some disclose pricing only upon inquiry.

While this variety can seem somewhat random, there is an underlying logic to event pricing. By understanding this logic you can better anticipate your costs and gain valuable insights into how well an event might match your business goals.

The event organizer’s perspective

To understand event pricing, it’s necessary to first understand the perspective of conference and event organizers.

Events are expensive to hold. They have direct costs from venue rental, food, entertainment, audio-visual, etc. They also have indirect costs representing the significant employee and management time it takes to organize and hold an event.

On top of these costs, most organizers need to make a profit from their events. For media organizations, events sometimes subsidize the journalism division. At non-profit associations, event profits support the organization’s activities. And for-profit conference organizations need to maximize profits to satisfy shareholders.

As a result, when organizers create an event, the structure is often heavily influenced by the revenue model, in terms of how to best get attendees to pay and firms to sponsor.

While event organizers want to choose topics and event structures that appeal to attendees, topic selection also may be driven by the the organizer's sales process, since sponsors are most interested in speaking on topics that highlight their investment strategy or product.

The same goes for conference structures, where organizers implement certain sessions (like roundtables, keynotes and networking sessions) specifically to appeal to the needs of sponsors.

The "Conference Food Chain"

To maximize revenue, event organizers think in a way that we've termed the "Conference Food Chain”. Within every industry there is a natural hierarchy of buyers (those higher on the food chain) and sellers (those lower on the food chain). The below graphic shows the food chain in institutional investing.

In the above illustration an investment consultant is a “buyer” to those lower on the food chain (investment managers and service providers), but is also a “seller” to the institutional allocators at the top of the food chain. Managers are buyers to the service providers, but are sellers to the allocators, consultants and OCIOs/FoFs.

In our paper on how to choose the best conferences and events, we explore the business benefits that events offer. Most of these benefits relate in some way to this food chain, since they involve sellers trying to form relationships and increase their visibility with buyers.  

In general, those lower on the food chain are more willing to pay higher attendance fees or sponsorships in order to access those higher on the food chain, since they get a commercial benefit from that access.

Knowing this, conference organizers try to fill out the higher parts of the food chain (the buyers), usually offering them free or discounted registration. A large population of buyer attendees in turn attracts those lower on the food chain (the sellers) who financially support the event through attendance fees and sponsorships.

A few examples of this setup are:

• At a wealth management conference, financial advisors pay low rates while asset managers and vendors pay higher rates.
• At an institutional investor conference, allocators attend for free, while managers can only attend if they are among the handful of sponsors (paying in the five figures).
• At a private equity conference devoted to operational topics, PE fund operations executives attend for free, while vendors must sponsor to attend.

In most cases the food chain concept best describes the logic behind an event's pricing structure and why most individuals and firms attend. However, we should note there are exceptions.

Sometimes attendees go to see and hear from their peers, or they go for the content. Also, sometimes attendees go because they are interested in buying (rather than selling).

Examples are investment marketers going to an event to meet with peers, wealth managers going to an exhibition to learn about the latest in advisor tech, or hedge funds attending an event to meet alternative data providers.

It's also worth noting that prices can vary significantly based on factors other than the cost structure.

A non-profit that takes a cost-recovery approach for events would charge lower rates vs. a for-profit conference organization. Likewise, a newer event that isn't well known will probably have lower pricing vs. an established event that regularly sells out.

Getting the balance right

Just like nature needs to be kept “in balance” in order for a food chain to be sustainable, the same goes for conferences.

One of the main reasons we see events decline is because this balance gets out of whack. For example, if investment managers attend a conference and find that there aren’t enough allocators, then the managers stop attending. Then service providers find that managers aren’t attending, and they stop attending as well.

For this reason, conference providers pay attention to the ratio of various attendee types. They’ll adjust pricing, create different pricing tiers, deliver different marketing pitches and outreach, and sometimes limit attendees by type.

Events that are healthy usually are in good balance, meaning that the attendee mix is optimized and all attendee types feel they are getting value and creating relationships that justify or exceed the time and cost.

While some conferences still have a “one price for everyone” approach, that’s often not the case, since pricing is one of the main levers organizers can pull to impact the balance of attendee types.

Final thoughts

A key takeaway is that evaluating conferences and events based on price alone isn’t smart. It’s important to move from a “cost” mindset, where cost minimization is the goal, to an “investment” mindset where maximizing ROI is the objective.

A cost mindset can limit you to events that are inexpensive for your type of firm but may have a low return on your time and financial investment. An investment mindset expands the opportunity set to events at higher price points but with higher returns on those investments.

Cost is also an important data point on the event’s structure, and so by understanding costs you can gain insights into the extent to which an event may be relevant to you.

For example, a high price point for investment managers often indicates that an event is built for their needs, providing quality access to in-demand investors. Likewise, low costs and free events can indicate that you are being positioned as a buyer, meaning that attendees may be your peers and those who want to sell to you.

Additionally, when it comes to costs, we believe it’s important that firms proactively define their own events universe, rather than having the events universe defined for them.

Firms are evaluating a smaller portion of the conference and event opportunity set if they only look at events that are previously known to them, or made known to them by the event organizer’s marketing.

Comprehensively researching events will lead to a wider range of options, allowing firms to choose events that have the most attractive cost/benefit ratio. This includes events that rank very high on benefits to participating, as well as lesser known events that offer good benefits at lower price points.