Choosing prizes and ticket prices

Start with the prize, then work backwards

Customers buy tickets for prizes they would love to own and cannot easily buy. Cars, watches, holidays, tech bundles and cash all work. Choose something with a clear retail value you can prove, because you will have to show you have bought it.

Then work backwards. Your cost is not just the prize. Add up everything before you set a price:

• The prize itself, including delivery, tax or registration where they apply.
• Payment card fees on every ticket.
• The platform fee. On Niche that is a monthly fee plus 5p per paid order, with no percentage of ticket sales, shown on the pricing page.
• VAT where it applies to your sales. Ask your accountant.
• Advertising and any influencer or content costs.
• A small allowance for refunds and chargebacks.

If you are new to this, read how to start a competition business in the UK first, and how much a competition website costs for the fixed costs.

The odds: simple and honest

If each ticket has one entry and one prize is drawn, your chance with one ticket is 1 divided by the total tickets sold. Buy more tickets and your chance rises in proportion.

• 5,000 tickets sold: one ticket has a 1 in 5,000 chance, which is 0.02%.
• 100 tickets from the same buyer: 100 in 5,000, which is 1 in 50, or 2%.
• 1,000 tickets sold: one ticket is 1 in 1,000, or 0.1%.

Fewer tickets mean better odds, which customers like, but less money to cover the prize. More tickets mean worse odds and more revenue. That trade-off is the heart of pricing.

Be careful how you talk about odds. Rule 8.20 of the CAP Code, enforced by the ASA, says you must not exaggerate a consumer's chance of winning. Quote the real number of tickets available. If there is a maximum, say what it is.

Setting the price and the ticket cap

Work out the tickets you need to sell to cover your costs, and then decide how likely you are to sell them.

A worked example

Say the prize is worth £10,000 and you offer 5,000 tickets at £3. If every ticket sells, you take £15,000. Suppose the platform charges 5p per order, as on every Niche plan, and every buyer buys one ticket per order. That is the most you would pay.

• After the 5p order fee, each £3 ticket leaves you £2.95.
• To cover a £10,000 prize you need £10,000 divided by £2.95, which is 3,390 tickets (rounded up).
• That is just over two thirds (68%) of the 5,000 tickets.

This is deliberately simple. It ignores card fees, VAT, the monthly fee, advertising and delivery, all of which push your break-even point higher. In real life you would want to sell well over 68% to make a profit. Use your own numbers, not these.

A few rules of thumb help:

• Keep prices low enough to feel like a treat. Competition ticket prices for big prizes are often set at a few pounds or less, so a high-value prize needs a lot of entries.
• Cap the total tickets. The cap sets your odds and your maximum revenue. Do not leave it open.
• Set a per-person cap. A limit stops one person buying a large share and protects customers from overspending. Niche adds spend limits and self-exclusion on every plan.
• Do not price below the cost of a stamp. The free postal route costs the entrant a stamp. If paying is cheaper than posting, a regulator may doubt the free route is a real choice. We treat a stamp as the floor, and Niche's go-live check blocks competitions priced below it.
• Give people enough time. Niche's go-live check also blocks competitions with too short an entry window.

The free entry route and skill question are part of how your competition stays legal, so build your pricing around them, not the other way round. See the free entry route explained.

Sell-out risk: what if tickets do not sell?

You are committing to a prize before you know how many tickets you will sell. That is the main financial risk in this business. Plan for it before launch, not during.

• Decide your minimum. Know the number of tickets below which you lose money, and how much that loss would be.
• Choose prizes you can live with. A prize you could sell on or use for a later competition is safer than one that is bespoke.
• Say what happens in your terms. Write down in advance what you will do if sales are low. The safest plan is to run the draw on the advertised date with the tickets sold. Then follow it.
• Never change the rules halfway through in a way that disadvantages people who have already bought. The DCMS voluntary code asks operators not to cut a prize's value, move the end date or cancel a draw because of low sales.
• Test with smaller prizes first. Learn your real conversion before staking £10,000.

Niche requires proof that the prize is bought before a competition goes live. That protects customers, and it also stops you launching a competition you cannot fund. Refund, chargeback and reconciliation tools are there if you need to unwind entries.

Cash alternatives

A cash alternative lets the winner take money instead of the goods. It can lower your risk, because you can pay in cash rather than hold an expensive item, and some winners prefer it.

• State the alternative and its amount in the ad and the terms from the start.
• Make the cash figure fair. CAP Code rule 8.15.1 says promoters must award prizes as described, or a reasonable equivalent.
• Do not change the offer after entries open.
• Be clear about who pays any tax or fees on the prize.

This is general information, not legal advice. Take advice from a solicitor before you launch.

Once your numbers work, the next job is getting tickets in front of people. Read how to market a competition website, and use the full set-up guide to check nothing else is missing.

Frequently asked questions