In a competitive community, there are a couple of issues you can focus on: being inclusive and encouraging the less skilled players to have a go, or being exclusive and just trying to benefit the people already competitive.
To that end, let’s think about event pricing.

There are generally two fees that a player pays when attending an event: Entry fee and game fee. Game fee you pay to compete in a game, with the money from each competitor going into a total prize pot which is redistributed to some small portion of the best players. Entry fee allows you to compete in the first place.
Obviously there’s not a lot of tweaking that needs to be done for game fee. Price each game low, and you encourage entry into more games by more people, of a wider skill level. Encourage enough people and you get a large prize pot, at the expense of the time required to run the tournament bracket itself (which of course can be mitigated in several ways with a little planning and effort). Some matchups will be very lopsided, but players of lower skill levels will gain experience and not be too worried by the loss due to not having thrown much money into it. You might even pick up some new players who just entered on a whim.

Alternatively, price each game high, and people will only enter games they think they have a decent chance at. Lower skill level players will not enter many (or even any) games because the stakes are too high. They will not gain the experience of being forced to play under tournament pressure, or of facing stronger opponents. Why price the games high then? Perhaps you want fewer entrants because you can’t afford the time to play out larger brackets, and so only want people that are serious. Maybe you want a big prize pot and think enough people will still enter to achieve your target. Maybe you only want ‘good’ matches. Maybe you want the entrants to play their hardest because there’s more on the line. Maybe you simply don’t want weak people. Are any of these reasons good enough to lessen the number of people entering each game, and discourage less skilled players?
Also, if an event is running relatively niche games that fewer people play in the first place, and charging the same rate as everything else, don’t expect that game to have a good turnout. Sure, you’ll get the dedicated fans playing, but not dabblers or people only interested in picking it up.

Note that the game fee does not (or at least SHOULD not) have bearing on any other values than the prize pot for that game. If there’s a minimum prize pool, either it’s being sponsored (which you’ll likely know about!) or the money is being siphoned from some other source, which you’ll probably be unaware of. Maybe it’s from excess entry fees. Or from some other game’s prize pot. You don’t really know. Hopefully you trust your tournament organisers.

On to entry fees. What is your entry fee supposed to go towards?

This is effectively your ‘entertainment cost’. If you go to a movie, you spend $16 or so for the 2 hours of the film as an entertainment cost. Obviously this money goes to the theatre for rent, staff wages, electricity usage, maintenance, and further back, to the distributors, publishers, studio and creators of the movie itself, to itemise even a small list. That’s quite a distribution split of your $16, and sometimes you think it’s a waste, sometimes a fantastic use of that money.

So let’s say you pay $10 to the venue fee of a small tournament. Your ‘entertainment cost’ covers you for the hours of the tournament, which generally are much longer than that of a movie. You get to watch the matches, interact with the people, use the venue facilities and have a good time if you so choose. Of course, a spectator pretty much get all this too, so what else? Usually you’ll be allowed to play on casual setups if time and equipment allows, and of course the ability to actually enter the tournaments of your choice. Generally, you’re showing support for the event.

The naive assumption is that this money is what goes towards venue cost. So if 50 people turn up, there’s $500 straight up from entry fees. This money pool may or may not cover the venue cost outright, depending on swankiness of venue, whether they charge for various extras like electricity or tables, etc. Maybe if the venue only cost $300 then the organisers would put the extra back into the pot. Maybe it will be put aside to offset some later event’s venue fee, so the entry fees can be reduced. Maybe they wouldn’t, it’s entirely up to them.
Let’s assume this event is one of a string of events, and that there is some money put aside from previous events. Let’s also assume the entry fee for the next event is decreased because some of that money is used to lessen the blow from the venue hire. What would you think the outcome of this to be? Perhaps you’ll get a few more people coming along because it’s easier financially to justify. Maybe more people of a lower skill level, or even new people, who have no hope of winning any prizes but are still interested in giving it a go at the right price. People coming along for casuals, or just to check things out. Now instead consider the effects if the entry cost were the same, or even GREATER than previous events. What kind of message is being sent in each of these scenarios? How do the greater effects of these decisions affect how hard it is for a new player interested in starting, but not very sure of themselves?

There are of course alternative ways of benefitting the event itself with the same money. You could for instance put the money back in as prizes, while leaving the entry fees at the original level. What kind of people is this more appealing to, compared with the approach of lowering the entry costs? Who will it benefit more? And how large a percentage of the players that attend? Again, what kind of message does this scenario send?
Clearly, there’s a sliding scale with the sweet spot somewhere between fees-so-cheap-you-lose-money and fees-so-high-you-have-money-to-burn, between attractive to new players, or competitive elitism. It’s really a philosophical standpoint: Would you rather foster a community with a large number of players with a wider skill set, or are you happy with fewer players who are considered ‘more competitive’? How much are you able to push the scale until numbers drop off, and how far are you willing to try?

Obviously there are compromises, usually based on time and money. But in general it comes down to the organisers’ time, and YOUR money. I suggest you make your opinions heard if you’d prefer some changes – if you’d really like to enter several games at some event but the game fee is putting you off, TELL the organisers. Then next time maybe there’ll be changes and you can play more of the games you want. Or if you’re put off coming to the event at ALL because of the cost, SAY THAT! It’s not a big effort, and could actually have pretty big changes as a result.

Discouraging lesser skilled players from even a major event with high pricing structure or any other method is like not allowing Equatorial Guinea to have an entrant in the Olympic Games; sure you’ll still get the Michael Phelpses of the world at your event, but you deny an Eric The Eel the experience of a lifetime, the inclusive community, and what I would argue is the TRUE essence of competition.

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