The Art and Science of Sponsorship Pricing

One of the toughest questions facing the sponsorship industry is: How do I price my proposal?  The simple answer is that it’s a combination of art and science. I recently spoke at the IAFE Sponsorship and Marketing Conference in San Antonio, and along with my presenting partner we tackled sponsorship pricing.

Many smart people have addressed the question by creating pricing models. Applause to industry leaders IEG and Power Sponsorship for developing a framework to use when pricing sponsorship programs. They represent both ends of the spectrum—IEG a little bit scientific, Power Sponsorship a little bit artsy.

I like to geek out on occasion and dive into the science, applying mathematical equations to determine the fair market value. I’m a believer in putting a value on the tangible assets using media equivalencies. The formulas are available, used by agency media buyers and accepted by advertising executives, so why not apply them to sponsorships? Well, because it only tells half the story – and not the better half.

Sponsorship is about aligning a company’s brand with a property’s audience and image. The value of the sponsorship resides in the intangible benefits of the partnership; the skills and experience of the seller and buyer, along with market conditions, drive the price. Over the years I’ve collected considerations from various sources when determining the price of a sponsorship program:

 

Art vs. Science - Sponsorship Pricing Strategies

Whew! That’s quite a list! Granted, not every point needs to be taken into consideration, but I’m an advocate of developing a model that will clearly explain how you arrived at the price. These points will give you a starting point and a framework. Regardless of your pricing methodology, what’s important is that you have one. But what’s more important is that you have price integrity.

Establishing value for your sponsorship program begins with your first interaction you have with a sponsor. How you approach the process will establish your worth and the value of the property you represent. Your ability to ask smart questions to understand your potential sponsors objectives and then create a program that will support those efforts is the most critical component. This may hurt a little—It’s not about YOU, it’s about THEM.

Here are a few best practices when establishing value:

  1. Place the visitor at the center—the best sponsorship programs enhance the visitor experience and address a pain point
  2. Ideas and experiences drive value, not logo placement and signage
  3. Customize every proposal to connect with sponsors brand and goals
  4. Be prepared to explain how you arrived at the price
  5. If you reduce price, reduce benefits; if you increase benefits, increase cost

Preparation goes a long way, it may take some time, but a good pricing strategy will improve your performance. If you need help navigating the process contact us, we’re happy to help!