Another option is for them to sponsor us, if they think it
gives them any visibility. It is not a bad idea actually since
this could be the first large scale event for them ?

Afraid not. they handled the tickets for proto.in rubycon and a few other the last one and a half years. 

 That way instead of we paying them, they support us,  by
either giving a massive discount or for free.
 
i have been following them and the last i heard they have been seriously researching on python for a few product of theirs. keeping this in mind and the good will pycon will generate for them, you should probably ask them for a better deal. would the person coordinating send me a personal mail, so that we can co-ordinate on a better pitch ?
 
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Kausikram Krishnasayee
Company: http://silverstripesoftware.com | Webpage: kausikram.net | Blog: blog.kausikram.net | Twitter: http://twitter.com/kausikram | Email: kausikram@gmail.com | Mobile: +91 9884246490