How to Make Your Competitions Profitable…

Hey, Tom here, co-founder of Givewaze. After helping countless competition businesses thrive, I've learned a thing or two about ensuring profitability. Let's dive into the nuts and bolts of how to make money from a draw…

Understanding Your Competition Economics

At its core, a profitable competition boils down to simple maths:

Revenue - (Prize Cost + Operating Expenses) = Profit

Sounds straightforward, right? But there's an art to balancing these elements. Let's break it down:

1. Revenue Calculation

The lifeblood of any competition business is its revenue stream. Understanding how to maximise this whilst keeping your offerings attractive to participants is crucial. Your revenue is primarily driven by ticket sales. Consider:

• Number of tickets available

• Price per ticket

• Any multi-buy discounts

Things to try:

• Experiment with different ticket prices

• Offer tiered pricing (e.g., 1 for £1, 3 for £2.50, 10 for £7)

• Use early bird discounts to drive initial sales

2. Prize Costs

The prize is what draws people to your competition, but it's also typically your largest expense. Striking the right balance between an enticing prize and maintaining healthy profit margins is a delicate dance that every successful competition business must master. Remember:

• Bigger prizes attract more entrants, but eat into profits

• Consider non-cash prizes that may have a lower cost to you than perceived value

Things to try:

• Partner with brands for sponsored prizes

• Offer experience-based prizes (often high perceived value, lower actual cost)

• Use a mix of high-value and smaller supplementary prizes

3. Operating Expenses

While often overlooked, operating expenses can significantly impact your bottom line. Understanding and managing these costs is essential for long-term profitability. Don't forget to factor in:

• Website hosting and maintenance

• Marketing costs

• Payment processing fees

• Staff time for managing the competition

Things to try:

• Streamline your operations to reduce overhead

• Look for all-in-one solutions to simplify expense tracking

• Consider platforms that bundle services to reduce overall costs

The Givewaze Advantage: With Givewaze, we simplify this entire process. We cover all operating expenses under one comprehensive fee. This means you always know exactly what your overheads will be, making it easier to calculate and forecast your profitability. No hidden costs, no surprises - just straightforward, predictable expenses that help you plan with confidence.

Pulling the Profitability Levers

Now, let's look at some key levers you can adjust to boost profitability:

1. Ticket Price Optimisation

Pricing is both an art and a science in the competition world. It's not just about setting a price; it's about finding that sweet spot where perceived value meets profitability. Finding the right balance is crucial. Too high, and you'll struggle to sell. Too low, and you'll leave money on the table.

Things to try:

• A/B test different price points

• Implement dynamic pricing, reducing ticket costs as the draw nears

• Use scarcity tactics (e.g., "Only 100 tickets left at this price!")

2. Sales Volume Strategies

While price is important, volume can be the key to unlocking significant profits. Developing strategies to increase the number of tickets sold can have a dramatic impact on your bottom line, often without the need to adjust your prize or price point.

Things to try:

• Extend your marketing reach through social media and partnerships

• Offer referral bonuses to incentivise shares

• Create urgency with limited-time offers

3. Encourage Player Loyalty

In the world of online giveaways, constantly chasing new customers can be a costly endeavour. Many competition brands overlook their existing customer base, missing out on a golden opportunity for increased profitability. Nurturing player loyalty is not just more cost-effective—it's a powerful lever for boosting profitability. Returning players require less marketing spend, participate more frequently, and often become brand advocates.

Things to try:

• Implement a loyalty programme with points or tiers

• Offer exclusive competitions or early access to loyal players

• Use personalised communications to re-engage past participants

• Create a community around your brand to foster a sense of belonging

The Givewaze Advantage: Our platform comes with built-in tools designed to encourage repeat business. From automated re-engagement campaigns to customisable loyalty schemes, we provide everything you need to keep your players coming back. By leveraging these tools, you can significantly drive down your customer acquisition costs and boost your profitability, building a community of loyal players excited to participate in every giveaway you launch.

4. Operational Efficiency

In the world of competitions, every penny counts. Streamlining your processes isn't just about saving time; it's about boosting your bottom line. Efficient operations can significantly reduce costs and increase profitability, allowing you to run a lean, mean competition machine.

Things to try:

• Automate ticket sales and winner selection

• Use data analytics to inform future competition planning

• Implement a robust CRM system to nurture repeat customers

Balancing Act: Planning Your Competition Calendar

Remember, not every competition needs to be a blockbuster. The key is maintaining overall profitability across your calendar.

• Mix high-margin "bread and butter" competitions with attention-grabbing headline prizes

• Use data from past competitions to inform future planning

• Always have a clear target profitability for each competition and your overall business

The Givewaze Advantage At Givewaze, we understand these challenges intimately. That's why we've built a platform with a comprehensive Competition Planner. Our tool helps you:

1. Calculate unit economics and profitability levels for each competition

2. Plan your competition calendar to balance high and low margin events

3. Forecast overall profitability, ensuring your business stays on track

Ready to Take Your Competition Business to the Next Level?

Don't leave your profitability to chance. With Givewaze, you'll have the tools and insights needed to run a thriving, profitable competition business.

Curious to see how our platform can transform your planning process? Let's chat about optimising your competition strategy!

Your Competition Profitability Checklist

Before you launch your next competition, run through this checklist to ensure you're set up for success:

• Have you calculated your break-even point?

• Is your ticket price optimised for both appeal and profitability?

• Have you considered multi-buy discounts to encourage higher volume purchases?

• Is your prize cost less than 50% of expected revenue?

• Have you explored partnerships or sponsorships to reduce prize costs?

• Are your operating expenses clearly understood and minimised?

• Have you set up tracking for key metrics (ticket sales, conversion rates, etc.)?

• Is your marketing strategy in place to drive sufficient ticket sales?

• Have you planned this competition as part of a broader, balanced calendar?

• Are you using a platform (like Givewaze) to streamline operations and reduce overhead?

Remember, profitability isn't just about one big win—it's about consistent, strategic planning and execution. With Givewaze, you'll have the tools and support to tick every box on this checklist and run consistently profitable competitions.