Price points for Raffle tickets

[frankbmd]

I am watching the Kreindler Event with some interest and this thread should not be construed in any way as a criticism of how the event is being run, but I think there are several questions that could be asked and probably have been asked by the organizers of this event and others.

Consider first Powerball, cheap tickets that attract more "investors" as the jackpot increases. Even with the lowest jackpot, it is sustainable because the jackpot is based on sales. The willingness to fork out a buck or two on a pipe dream seems attractive to a very large pool of participants, and as the odds get longer, the pool gets bigger.

Then consider the Dream Home fundraising method of St. Jude's Hospital. In this event a $300-400K home is built in a community. Much of the expense is donated by contractors for advertising. 10,000 tickets are offered at $100 each. I believe more can be sold based on demand, but at 10K tickets, St Jude's grosses at least one million, and I believe it is rare when unsold tickets are left on the table. Here the jackpot is less substantial than Powerball, but more "attractive" because the odds of winning are better and the ticket price is in essence a charitable donation, and the ticket holders get the satisfaction of charitable giving even if they are losers.

The Kreindler Event has an even smaller jackpot if you will, and a smaller pool of folks with potential interest in buying tickets, but I look at the list of ticket buyers and the majority I believe (I didn't count) have reserved three or more tickets. The odds of winning at the five ticket ($100) level are still quite small, but the jackpot is attractive enough for them. Like the Dream Home example there is a minimum required of ticket sales, but Kreindler is not a charitable donation.

My question therefore is would the Kreindler event reach its target price quicker if the tickets were less expensive?

I doubt that those willing to spend $60, $80 or $100 in the event would spend any fewer dollars if the tickets were less expensive. If the tickets were $2, would a significant number of Powerball type players chip in without affecting the the twenty dollar and up pool of buyers. Would a $5 or $10 ticket option allow the goal to be reached sooner or would many of the $20 single ticket buyers simply risk $5 or $10 for a single ticket instead of the $20 buy in?

With variables of jackpot size, jackpot cost, ticket price, potential buyer pool size and intangibles (i.e. Charitable giving effect), I seriously doubt that any mathematical answer for any given event could be constructed that would be at all accurate. For a series of similar events I'm sure trial and error with different formats might be helpful.

That said, I'm sure that billyb would be tickled to death if $2 tickets were offered for the Kreindler event.

Any thoughts?

[Leon]

That is actually a great question. How did you come up with that?

(wait, is this still the annoy Frank thread?)

[Peter_Spaeth]

Originally Posted by Leon

That is actually a great question. How did you come up with that?

(wait, is this still the annoy Frank thread?)

He was eager to say something useful after his epic flop at 3000.

[Lordstan]

It is an interesting question, but there is another part that factors in.
I think the answer to your question is definitely yes, more tickets would be sold, but would the amount of money raised be enough to allow Graig to do the painting? This raffle is a way for someone interested in getting a painting from Graig get one for much less than the usual commission rate, but it is not a charity raffle like St Jude's or a mega-dream raffle like the powerball. Both of those raffles will proceed forward regardless of how many people buy tickets. If we don't reach 250 tickets @$20 per($5K), then there is no raffle. At $2 per chance, that would mean we would need to sell 2500 chances.
I am sure that more tickets would sell, but am not sure if it would reach that threshold.

[frankbmd]

Originally Posted by Lordstan

It is an interesting question, but there is another part that factors in.
I think the answer to your question is definitely yes, more tickets would be sold, but would the amount of money raised be enough to allow Graig to do the painting? This raffle is a way for someone interested in getting a painting from Graig get one for much less than the usual commission rate, but it is not a charity raffle like St Jude's or a mega-dream raffle like the powerball. Both of those raffles will proceed forward regardless of how many people buy tickets. If we don't reach 250 tickets @$20 per($5K), then there is no raffle. At $2 per chance, that would mean we would need to sell 2500 chances.
I am sure that more tickets would sell, but am not sure if it would reach that threshold.

My question actually is based on the fact that the $20 and up pool might be affected less negatively than what would be gained by a reduced ticket price, that would add attract people who value their $20 bills.

I'm quite sure that a million dollars worth of Powerball tickets are sold long before 10,000 Dream House tickets. The same goal is reached faster with the cheaper ticket in this example. The only way to know for sure would be try it, as I suggested (hi billy).

[Lordstan]

I understand.
So the theory goes..
1) People who spent $100 in tickets will still spend $100, or $80, etc.
2) People who don't want to spend $20 might spend $2 or $5
Therefore more people buying tickets results in more money raised.

Interesting. The only downside, which you mentioned would be if those who spent $100, now only spent $80.

[billyb]

Frank,
We have thought about the lower pricing of these entries, and would love to reduce the price, to make it easier, for someone to afford a $5 or $10 entry. But besides the much longer list and more payment collections we would have to endure, I certainly would not mind the extra work.
But the lower cost of each entry, devalues each entry(naturally), and each participant would only get the one entry number, compared to the three or four they will get now.
And remember, we base our winning number from an attendance figure, using the last three numbers. If we go down to $10 per entry, we would need 500 entries to reach Graig's consignment fees. One number past 500, and each entry would only get one number. If we go down to a $5 entry, we would need to sell all 1000 entries, and there would be no room for the possibility of obtaining enough money to offer an even larger painting, if money so dictates.
Even at $10 per, once we reach that 5K mark, (500 entries), then all entries go down to only one entry number per purchase.
The $20 gives us the room for that step increase, and gives purchaser better odds.
I hope this explains our decision to keep the cost at $20.

[LEHR]

I've thought about this in the past and I'm in the camp that more chances would be sold at a lower price point. I think that even dropping the price to $10 a chance with a minimum of 500 sold ($5k) would get more people off the fence and to take a chance. But I could be totally wrong about my assumption. Speaking for myself; I bought 6 for $120 because that's where I felt comfortable and I'd have spent the same amount on this raffle regardless of the price being $20, $10, $5 or $2.

Just my two cents.

[Basebill]

I think the big detriment to having the raffle be only $1 or $2 is the more work it entails for the organizers. It's easier to keep track of 250 $20 entries being paid than 4000 $1 entries being paid. Just thinking about double checking a list of 4000 for payments received makes me shudder. Plus, since Graig is being paid through services like PayPal, having a huge influx of $1 payments hitting his account might send up red flags in their system. Just my $0.02.