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Medium Profitability Pricing Growth Strategy

Events.com

#Technology
ProHub Comment

This is a classic profitability paradox case where market share growth masks underlying margin deterioration. The core insight requires candidates to connect pricing strategy changes to revenue structure and variable cost dynamics—specifically recognizing that switching from a 10% variable fee to a tiered fixed-fee model created a revenue headwind as higher-transaction-value customers entered the mix. Strong analysis requires systematically decomposing the P&L drivers rather than accepting surface-level metrics.

Estimated Time 26 minutes
Difficulty Medium
Source Kellogg
10 / 100
Our client is Prospect Equity Partners (‘Prospect’), a prominent Private Equity firm that invests in the technology space. They have recently acquired Events.com due to strong commercial wins and momentum in the market. Events.com is a leading SaaS-based registration/ticketing platform for Endurance events (5K runs, Marathons, Triathlons, Mud Runs, etc.). They make money by taking registrations and processing payments for events and charging a fee per transaction (similar to Ticketmaster or Eventbrite) ($100 registration price x 10% Fee = $10 in Revenue for Events.com). Events.com has doubled market share since 2015, but in the last two years revenue is flat and profits are down, despite growing share. Prospect wants you to determine what is causing this and come up with a plan to improve profitability.

Clarifying Information

  1. Market: The market has declined ~4% per year since 2015, driven by low participation in experiential runs like Color or Mud Runs
  2. Competition: Two main other players in space: Active Network and RunSignUp. No recent entrants.
  3. Customers: Customers are all in the US. Historically, local 5K events are targeted, but Events.com recently signed IRONMAN triathlon in Q4 2017, which has $125M in transaction volume per year, and other premium events
  4. Product: The product platform is called EventWorks Endurance, and has been around for 10+ years
  5. Company: No changes have been made to company since being acquired by Prospect
Mock Interview
Interviewer

Our client is Prospect Equity Partners ('Prospect'), a prominent Private Equity firm that invests in the technology space. They have recently acquired Events.com due to strong commercial wins and momentum in the market. Events.com is a leading SaaS-based registration/ticketing platform for Endurance events (5K runs, Marathons, Triathlons, Mud Runs, etc.). They make money by taking registrations and processing payments for events and charging a fee per transaction (similar to Ticketmaster or Eventbrite) ($100 registration price x 10% Fee = $10 in Revenue for Events.com). Events.com has doubled market share since 2015, but in the last two years revenue is flat and profits are down, despite growing share. Prospect wants you to determine what is causing this and come up with a plan to improve profitability.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
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Events.com, despite doubling market share since 2015, experienced flat revenue and declining profits in 2017-2018. The root cause was a pricing restructure from 10% variable fees to tiered fixed fees ($3-$5.50), which failed to capture upside as higher-value customers (like IRONMAN triathlon) joined but lower-value customers churned. The solution involves adding a 2.25% credit card fee to premium tiers, generating approximately $8.4M in incremental revenue.

Key Insights:

  1. Market share growth can mask profitability deterioration if pricing and cost structures are misaligned
  2. Variable cost analysis is critical—payment processing costs grew with transaction volume despite flat revenue, indicating the revenue per transaction declined
  3. Pricing architecture matters: fixed-fee tiered pricing caused revenue leakage when customer mix shifted toward higher transaction values
  4. Customer acquisition strategy (premium events like IRONMAN) must be evaluated against pricing model fit
  5. Candidates should decompose revenue metrics (fee rate, price per registration, transaction volume) to isolate root causes rather than stopping at high-level profit decline observation