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Ruby on Rails Test / rails-test (push) Failing after 1m50s
- Promoter can now create an event in draft mode - Place is found based on address and long/lat are automatically deducted from it - Slug is forged using the *slug* npm package instead of custom code
13 KiB
13 KiB
Pricing Model Recommendations
Current Problem Analysis
Current Model: €1 Fixed Fee Per Order
- Revenue: €1.00 per order (regardless of ticket price)
- Stripe Costs: 1.15% + €0.25 per transaction
- Result: Losing money on higher-priced tickets
Financial Impact Examples
| Ticket Price | Current Revenue | Stripe Fees | Net Profit/Loss |
|---|---|---|---|
| €20 | €1.00 | €0.48 | +€0.52 ✅ |
| €50 | €1.00 | €0.83 | +€0.17 ⚠️ |
| €100 | €1.00 | €1.40 | -€0.40 ❌ |
| €200 | €1.00 | €2.55 | -€1.55 ❌ |
Critical Issue: We lose money on any ticket above €65 (€1.00 - (€65 × 1.15% + €0.25) = -€0.00)
Recommended Pricing Models
Model 1: Percentage-Based (Recommended)
Platform Fee = 3-5% of ticket price
Advantages:
- Always profitable regardless of ticket price
- Scales naturally with event value
- Simple for promoters to understand
- Industry standard approach
Financial Impact:
| Ticket Price | 3.5% Fee | Stripe Costs | Net Profit |
|---|---|---|---|
| €20 | €0.70 | €0.48 | €0.22 |
| €50 | €1.75 | €0.83 | €0.92 |
| €100 | €3.50 | €1.40 | €2.10 |
| €200 | €7.00 | €2.55 | €4.45 |
Model 2: Hybrid Model (Best)
Platform Fee = €1.50 + 2% of ticket price
Advantages:
- Higher base fee covers Stripe fixed costs
- Percentage component scales with value
- Better margins on low-priced tickets
- Predictable minimum revenue per transaction
Financial Impact:
| Ticket Price | Hybrid Fee | Stripe Costs | Net Profit |
|---|---|---|---|
| €20 | €1.90 | €0.48 | €1.42 |
| €50 | €2.50 | €0.83 | €1.67 |
| €100 | €3.50 | €1.40 | €2.10 |
| €200 | €5.50 | €2.55 | €2.95 |
Model 3: Tiered Flat Fees
€0-25: €1.50 fee
€26-75: €2.50 fee
€76-150: €3.50 fee
€151+: €5.00 fee
Advantages:
- Predictable fees for promoters
- Simple pricing tiers
- Better than current model
Disadvantages:
- Less scalable than percentage
- Requires tier management
Industry Benchmarks
| Platform | Fee Structure | Effective Rate (€50 ticket) |
|---|---|---|
| Eventbrite | 3.7% + €0.59 | €2.44 |
| Universe | 2.5% + €0.49 | €1.74 |
| Ticketfly | 4% + €0.99 | €2.99 |
| Recommended | 3.5% | €1.75 |
Implementation Strategy
Phase 1: Immediate Implementation (Week 1-2)
- Switch to 3.5% percentage model for new events
- Grandfathering: Existing published events keep €1 pricing
- Communication: Notify promoters 1 week before change
- Update pricing display on event creation and checkout pages
Phase 2: Optimization (Month 2-3)
- A/B Test different rates: 3%, 3.5%, 4%
- Monitor metrics:
- Promoter signup rate
- Event creation volume
- Revenue per transaction
- Customer complaints
- Adjust based on data
Phase 3: Premium Tiers (Month 4-6)
- Volume discounts for high-performing promoters:
- Standard: 3.5%
- Bronze (€5K+ monthly): 3%
- Silver (€15K+ monthly): 2.5%
- Gold (€50K+ monthly): 2%
- Annual contracts with reduced rates
- White-label options for enterprise clients
Revenue Projections
Current State (€1 fixed)
- Average ticket price: €35
- Monthly orders: 1,000
- Monthly revenue: €1,000
- Monthly Stripe costs: €628
- Net monthly profit: €372
With 3.5% Model
- Monthly revenue: €1,225 (3.5% × €35 × 1,000)
- Monthly Stripe costs: €628
- Net monthly profit: €597 (+60% increase)
With Growth (3.5% model + 20% more events)
- Monthly orders: 1,200 (20% growth from competitive pricing)
- Monthly revenue: €1,470
- Net monthly profit: €842 (+126% increase)
Technical Implementation
Database Changes
# Add to events table
add_column :events, :commission_rate, :decimal, precision: 5, scale: 4, default: 0.035
# Add to users table (for premium tiers)
add_column :users, :commission_tier, :string, default: 'standard'
Fee Calculation Logic
class Order < ApplicationRecord
def calculate_platform_fee
event = self.event
commission_rate = event.commission_rate || 0.035
base_amount = total_amount_cents / 100.0
(base_amount * commission_rate * 100).to_i # return in cents
end
def platform_fee_euros
calculate_platform_fee / 100.0
end
end
Promoter Dashboard Updates
- Show fee breakdown on event creation
- Display projected fees during ticket setup
- Add revenue vs. fees analytics
- Export fee reports for tax purposes
Communication Plan
Email to Existing Promoters
Subject: "Important Pricing Update - New Fair Fee Structure"
Key Points:
- Current model loses money on higher-priced tickets
- New model ensures platform sustainability
- Better features and support with improved revenue
- Existing events unchanged, new events only
- Competitive with industry standards
Website Updates
- Update pricing page with clear fee calculator
- Add FAQ about fee structure
- Transparency about what fees cover (development, support, payment processing)
Risk Mitigation
Potential Issues
- Promoter backlash: Higher fees on expensive tickets
- Competitor advantage: Other platforms with lower fees
- Reduced event creation: Promoters may create fewer events
Mitigation Strategies
- Value communication: Emphasize platform improvements and reliability
- Competitive analysis: Position as "fair and sustainable" vs. competitors
- Volume incentives: Quick path to reduced rates for active promoters
- Feature rollout: Launch new promoter features alongside pricing change
Success Metrics
Financial KPIs
- Monthly recurring revenue growth
- Average revenue per transaction
- Profit margin improvement
- Customer acquisition cost vs. lifetime value
Product KPIs
- Promoter retention rate
- New event creation volume
- Average ticket prices
- Customer satisfaction scores
Conclusion
The current €1 fixed fee model is financially unsustainable and actually costs us money on higher-value transactions. Moving to a 3.5% commission model will:
- Ensure profitability at all ticket price levels
- Align with industry standards for competitiveness
- Scale revenue naturally with platform growth
- Fund platform improvements and better promoter tools
Recommendation: Implement 3.5% commission model immediately, with grandfathering for existing events and a clear communication plan to promoters.
Fee Collection Method: Industry Standard
Current Approach vs Industry Standard
Current Model (Not Recommended):
Customer pays: €50 + €1 fee = €51
Promoter receives: €50
Platform keeps: €1
Industry Standard (Recommended):
Customer pays: €50 (clean price)
Platform keeps: €1.75 (3.5% of €50)
Promoter receives: €48.25
How Major Platforms Handle Fees
Eventbrite:
- Promoter sets: €50 ticket
- Customer pays: €50
- Eventbrite keeps: €1.85 (3.7%)
- Promoter receives: €48.15
Ticketmaster:
- Promoter sets: €50 ticket
- Customer pays: €50
- Ticketmaster keeps: €5-7.50 (10-15%)
- Promoter receives: €42.50-45
Universe (by Ticketmaster):
- Promoter sets: €50 ticket
- Customer pays: €50
- Universe keeps: €1.74 (2.5% + €0.49)
- Promoter receives: €48.26
Why Deducting from Payout is Better
1. Customer Experience
- Price transparency: Customer sees exactly what they expect to pay
- No surprise fees: Reduces cart abandonment
- Competitive pricing: Easier to compare with other events
2. Promoter Benefits
- Marketing simplicity: Can advertise clean prices
- Psychological pricing: €50 sounds better than €51.75
- Competitive advantage: Not adding extra fees to customer
3. Platform Benefits
- Higher conversion rates: No fee-shock at checkout
- Better promoter adoption: Easier to sell to event organizers
- Industry standard: Follows established practices
Psychological Impact
Adding Fees to Customer (Current):
- Customer thinks: "€50 ticket... oh wait, €51.75 total" 😤
- Cart abandonment risk
Deducting from Payout (Recommended):
- Customer thinks: "€50 ticket, €50 total" 😊
- Smooth purchase experience
Promoter Dashboard Display
Ticket Price: €50.00
Platform Fee (3.5%): -€1.75
Your Earnings per Ticket: €48.25
Communication to Promoters
Before: "Platform charges €1 per order to customers" After: "Set your desired revenue per ticket, we handle the rest"
Example:
- Promoter wants €48.25 net per ticket
- They should set ticket price at €50
- Customer pays €50, promoter gets €48.25
- Clean, simple, industry standard
Competitive Analysis
Main Competitor: €1 Flat Fee
Our main competitor charges a simple €1 flat fee per order. Here's how our models compare:
Hybrid Model vs Competitor Analysis
Hybrid Model: €1.50 + 2% of ticket price
Competitor: €1.00 flat fee
| Ticket Price | Competitor Fee | Hybrid Fee | Difference | Competitive Position |
|---|---|---|---|---|
| €10 | €1.00 | €1.70 | +€0.70 | More expensive |
| €25 | €1.00 | €2.00 | +€1.00 | More expensive |
| €50 | €1.00 | €2.50 | +€1.50 | More expensive |
| €75 | €1.00 | €3.00 | +€2.00 | Break-even point |
| €100 | €1.00 | €3.50 | +€2.50 | Much more expensive |
Alternative Competitive Models
Option 1: Low-End Competitive Model
Platform Fee = €0.50 + 1.5% of ticket price
| Ticket Price | Competitor Fee | Our Fee | Difference | Position |
|---|---|---|---|---|
| €10 | €1.00 | €0.65 | -€0.35 | ✅ Cheaper |
| €25 | €1.00 | €0.88 | -€0.12 | ✅ Cheaper |
| €50 | €1.00 | €1.25 | +€0.25 | ⚠️ Slightly higher |
| €100 | €1.00 | €2.00 | +€1.00 | More expensive |
Option 2: Modified Hybrid Model
Platform Fee = €0.75 + 2.5% of ticket price
| Ticket Price | Competitor Fee | Our Fee | Difference | Position |
|---|---|---|---|---|
| €10 | €1.00 | €1.00 | Equal | ✅ Competitive |
| €25 | €1.00 | €1.38 | +€0.38 | ⚠️ Slightly higher |
| €40 | €1.00 | €1.75 | +€0.75 | Break-even |
| €75 | €1.00 | €2.63 | +€1.63 | Much more expensive |
Competitive Strategy Recommendations
1. Value Differentiation Approach
Since we'll be more expensive on higher-priced tickets, focus on premium positioning:
Value Proposition:
- "We're not the cheapest, we're the most complete"
- Advanced analytics dashboard
- Real-time sales tracking
- Professional promoter tools
- Superior customer support
- Platform reliability and sustainability
2. Market Segmentation Strategy
Target Market Positioning:
- Competitor: Best for small, simple events (€10-30 tickets)
- Us: Best for professional events (€40+ tickets) with serious promoters
3. Hybrid Competitive Approach
Tiered Offering:
- Basic Plan: Match competitor at €1 flat fee (limited features)
- Professional Plan: Hybrid model with premium features
- Enterprise Plan: Custom pricing with full feature set
4. Volume-Based Competitive Response
Free Tier Strategy:
- First 3 events per month at competitor's €1 rate
- Volume discounts for high-activity promoters
- Loyalty rewards for long-term customers
Marketing Positioning
"Choose Your Business Model" Campaign
For Simple Events (Under €40):
- "Need basic ticketing? Our competitor works fine"
- "Pay €1 flat fee for simple events"
For Professional Events (€40+):
- "Serious about your business? You need serious tools"
- "Fair percentage-based pricing"
- "Advanced analytics, marketing tools, priority support"
Brand Positioning Statement
"We're the Shopify of Events - Built for Growth"
This positions us as the premium option for serious promoters while acknowledging the competitor's advantage on small events.
Implementation Recommendation
Given the competitive landscape, we recommend Option 1 (€0.50 + 1.5%):
Advantages:
- Competitive on low-priced tickets
- Still profitable at all price points
- Better positioning against main competitor
- Appeals to both small and large event organizers
Financial Impact:
- Lower fees on tickets under €33
- Competitive fees on tickets €33-66
- Premium pricing on high-value tickets justified by features