A question we often get asked is “Should we embed the ticketing and credit card fees into the price of our ticket, or show them separately?” It seems like a simple question that should have a straightforward answer. Unfortunately, the question does not have a straightforward answer.
There are a few ways to look at it:
Logically, there is no reason to separate out ticketing/credit card fees and show them as “convenience fees” or “service fees”, when it comes to performing arts ticketing. There is no other cost that is separated out. You don’t allocate an “orchestra fee” or a “bookkeeping fee” or a “cleaning fee”. So there is no logical reason that ticketing fees should not be embedded in the price of the ticket, just like all other costs. However, …
Ticket buyers have become used to seeing service fees for performing arts ticketing, as well as for any other event ticketing. Ticketmaster kind of invented them 30 years ago. Back then, computer systems were very expensive for venues, and providing the convenience of placing a telephone order rather than driving to the venue and purchasing tickets was indeed a valuable service, meriting a service fee.
Like many things, the pendulum swung too far. Tacking on service fees became a very profitable revenue stream – extra revenues that the ticketing company can share with the venue. Often nowadays, there is not just one fee, but fee after fee. we have seen situations where there is a service fee, then a delivery fee, then an email fee. Fees can get to upwards of 40% the cost of the ticket!
Competition and Psychology
Psychology is fascinating when it comes to pricing. The reason almost all retail prices end in .99, and that that the has been the practice for over a century, is because our brains focus on the bigger items and less on the details. When we see a price of $4.99, our brain quickly sees 4 bucks and some change. If we see $5.00, our brain quickly sees 5 bucks. We all know that $4.99 is basically the same as $5.00, but our brain focuses on the first number.
When it comes to ticketing, if (and it’s a big if) the service fee is not high, most ticket buyers will tend to dismiss it. Paying a $2 service fee on a $28 ticket is not that problematic. And it allows the performing arts organization to say their tickets are $28, rather than $30. When customers tell each other about prices or read about them in the paper, the service fees are never mentioned, only the ticket price.
So if one performing arts organization includes the service fee in the price of their ticket, and another keeps it separate, the one keeping it separate will sound like they have lower ticket prices.
As stated above, most customers do not really notice a small service fee. For performing arts venues, “small” is usually the lesser of $2 or about 8% of the ticket value. i.e. don’t exceed $2; don’t exceed 8%. If you do, you may anger your customers. But, by all means, feel free to tack on the small fee. It provides more revenue, and most customers won’t mind.