Guest Author - Jennifer L. Thompson

Online sweepstakes and similar promotions are becoming more and more popular with businesses, and quickly becoming the number one choice for sweepstakes entrants, due to their being virtually free, as well as for their ease of access and entry.

In planning an online sweepstakes, there are several things to consider as far as costs go. The prize is only a fraction of what must be arranged, therefore administrative costs could go way beyond the price of the prize itself.

If an individual website wishes to attract more visitors by running a small sweepstakes, a large percentage of these kinds of games will be run by the website owner. This can save costs on hiring a sweepstakes administrator, however, one must then consider what one's time is worth in having to learn about sweepstakes laws in order to be compliant, promoting the sweepstakes, as well as time spent collecting, judging (to make sure entries are compliant with the rules) and/or tallying entries. Though these types of sweepstakes could take some time, if promoted and run properly, the end result of obtaining more clients/customers (many who will become long-term)and bringing in more cash flow, will generally be worth the cost of the time and effort put into it for the medium to large sized website or business, though for the small home-business owner, these costs may not pan out.

For larger, or for more complex sweepstakes, one may wish to hire a sweepstakes consulting firm or administrative agency. These can take care of either development of the sweepstakes, administrative tasks, or both, for the entire sweepstakes.

There are several competent agencies to choose from, each with enough longevity and experience in the business to be considered solid and trustworthy. These will be familiar with which laws will need to be considered for each type of sweeptakes, as well as for the areas it will be promoted in, as the laws may differ from one region to another. These agencies will often have a base fee for general work, which can include writing rules, drawing for winners, and doing general paperwork.

Depending upon the size of the sweepstakes and whether you wish to take a hands-on or hands-off approach, other costs to be considered may well include:

hosting fees,
filing fees (required in certain states for sweepstakes with prizes valued over $5,000),
bonds,
printing fees for scratch-off or similar type entries,
judging fees (which can be accrued on a per-entry basis),
prize delivery,
insurance,
other administrative costs such as data collection, tracking, and entry,
and post-sweepstakes analysis.

For the largest sweepstakes, a development team will often will include sweepstakes engineers, project managers, and so forth, and overall fees can start at around $5,000 and up. Smaller sweepstakes with basic administrative and/or judging services may run around $2,000 to $3,000.

These figures both apply to a one-time sweepstakes. Depending upon the specifics of each individual sweepstakes, costs may vary. Ongoing sweepstakes, such as those with a monthly draw, may differ in their fee structure.