I went to hear from Tom Griffith of Emma and Tom’s fruit juices at The Hive the other day. Apparently in their early days, their minimum production runs were always more than they could sell, which was a problem as their stock was highly perishable. Their clever solution was to use this excess as sponsorship for events.

This got me thinking about my social venture, the Churchill Club.  Although vastly different from a fruit juice company  i thought –   our production run, an event,   normally exceeds our ability to sell as well, i.e. there are normally some spare seats in the room.

Some quick facts:

• We run around 22 events a year in Melbourne on Technology, Entrepreneurship and Innovation.
• We can currently sit 60 people at an event.
• We charge for tickets but always have a couple of people attending free as they are the speakers, the speakers guest, or special guests of the club.
• Each person costs us to attend as we provide canape and have an open bar.
• We don’t break even until we reach 20 people and the modal event has around 35-40 people.

So after listening to Tom, it occurred that perhaps rather than looking at us selling an event, perhaps we should be thinking about it as having 60 seats available that are highly perishable, and normally 20 or so seats expire, un-consumed every fortnight.

With this in mind I thought about two potential options.

1. Giving away a couple of seats as sponsorship to some groups I think are worthy, and
2. Selling some excess tickets at the last minute discount that can sit just above our costs.

Now because I have recognised that I am no where near as clever as I used to think I was, I circulated these thoughts to my “brains trust” first. And below are paraphrased versions of their answers.

Scott Kilmartin – founder, haul : In the theatre business they call giving away free tickets, ‘papering the room’, which is great to add atmosphere and get some potential new members through the door. If you keep the ‘papering of the room’ relatively quiet and do it with a view to building alliances and tie in to some sponsorships then I think it’s a good idea.

Peter Lewis – GM Business Development, Hydrix : It would be worthwhile to be quite strategic with the sponsorships and deal with some some unexpected groups that would certainly touch the demographic. eg the RMIT entrepreneurship course or recruitment companies like Mitchell Lake.

Jon Manning – Director, Sans Prix : I would always say experiment and compare results. Discounting last minute tickets though is contrary to current pricing wisdom as patrons should be rewarded for booking early, not waiting to the last minute. Have a think about how airlines do ticket pricing, because these people are seriously good at it.

Bob Peterson – Director, F3 : Experimenting with your business model is intelligent. However I don’t like selling-off the perishable/fungible excess stock (discount model) even when/if you have a small number of pre registrations. It sets lower expectations to the attendees, whereas gifting tickets can raise credentials. Last minute discounting simply devalues your brand.

And yes, I had to look up fungible too.

I think the pattern was fairly clear though.

• Strategically gifting a few tickets on the quiet to worthwhile organisations = Good.
• Last minute discounting = Bad.
• Business model experimentation = Excellent.