A couple of years ago we wrote a somewhat intellectual blog on the “Price Elasticity of Processing Fees” that included fancy graphs. As we talk with lots of customers at the RunningUSA conference, this is once again a hot topic.
The simple fact is that participants will pay a higher processing fee. We see that as most registration companies – Race Roster, Haku, Active, imATHLETE/Enmotive and others charge a higher processing fee with a “per participant” charge of $1 or more. When we started we wanted to get away from that because we thought it was a discouragement to families attending races and have had the same pricing since day one. The simple fact is that the processing fee is not much of an influence on whether someone is going to come to your race or not. So races should consider charging a higher processing fee.
Who Should Get the Extra Processing Fee?
Well, there are three choices for this:
- Race
- Timer
- Software Vendor
RunSignup is a good example to use since we have the lowest fees and have the most functionality to offer customers. We allow the Race and the Timer and software partners to set their own extra processing fees (and there can be multiple added).
The race basically earns more money directly if they take all of the processing fee.
If part of the processing fee is going to the timer, then that is a great way to offset direct costs to the race. Timers are able to offer a higher level of service by getting some (or all) of their revenue from processing fees.
Software vendors like the partnership we announced with ChronoTrack and Athlinks are also able to set a processing fee where they get compensated for their value add software.
We get asked increasingly to play Solomon on this, and we are trying to stay out of this and leave it to the race, timer and software vendor.
RunSignup Partner Revenue Share
One of the earliest features and business strategies we developed was to offer a Partner Revenue Share. The idea is that a timer, or a race management company or a large race would offset some of our cost of selling and support because of their size and efficiency. This kicks in at 5,000 registrations with a 20% revenue share. This means that transactions over $50 have a net cost of 4.8%. RunSignup is able to run a profitable business that is growing over 20% per year with this open model.
With our increased size and market share, we are being asked at times to again play Solomon and split that. Our response is that we are supportive of the first entity who continues to provide that first level of support.