In the world of performing arts ticketing, service fees sometimes get a bad rap – deservedly so in many cases because companies such as Ticketmaster and AXS sometimes bring them into the realm of extortion.
It’s unfortunate because service fees do serve a fair purpose and can provide a reasonable source of revenue for performing arts organizations. Let’s explore how you can strike a balance and make money from service fees without leaving your patrons feeling gouged. Here is our Guide on Service Fee Pricing:
1. Service Fees Have Their Place
Let’s acknowledge that having service fees is not inherently unfair. These fees are in place to ensure that the events you put together can run smoothly and provide the best experience for your attendees. They should pay for the cost of expenses like credit card fees and your ticketing system. There is nothing wrong with them as long as they are a reasonable amount.
2. The 10% Sweet Spot
When it comes to setting your service fees, take a different approach than the industry giants. According to a report from the Government Accountability Office, TicketMaster tends to charge around 27% of the ticket price! In fact here is a screenshot from a Ticketmaster shopping cart showing 66% in service fees:
And here’s a screenshot of AXS.com showing 36% in service fees
This level of fees is gouging, but a more reasonable level is in the range of 10% is acceptable. Patrons generally are not bothered at this level – for example $3 on a $30 ticket. According to a National Association of Ticket Brokers (NATB) survey, about 63% of respondents considered a service fee of 10% or less to be acceptable.
3. Create Room for Margin
So, if charging $3 on a $30 ticket is reasonable, you’ll want to ensure that your cost is less than $3. If your ticketing vendor is charging you around 10%, you don’t have the opportunity to earn margin on the fees. Don’t let your ticketing vendor take the full 10%, leaving you empty-handed.
4. Flexibility in Fee Structures
Your ticketing system should allow you to charge both percentages and flat fees – or even a combination of both. This way, you can tailor your fee structure to different ticket tiers or event types, maximizing your revenue potential without alienating your audience. Be sure also that your system enables your to charge a percentage for tax if tax is required on your tickets.
Your ticketing system should also let you decide what service fees you will charge. Many systems simply offer the binary choice to pass on their fees to the customer or not, and do not allow you to set whatever fees you want.
5. Embrace Transparency
Transparency is non-negotiable. Patrons hate being surprised with a sneaky service fee on the last page of the shopping cart experience. Make sure that your ticketing system indicates that there are fees when ticket prices are presented. One effective practice is to prominently show the “plus fees” price alongside the base ticket price. This level of openness builds trust with your patrons and ensures they know exactly what they’re paying for.
Some states even require it by law. New York, for example, recently passed a law to prevent hidden fees.
Service fees are part of an overall pricing strategy. Download our paper on how to price tickets in a way that thrills patrons and maximizes revenue.
In conclusion, it’s possible to make money from service fees without resorting to the heavy-handed tactics of industry giants. By setting reasonable fees, ensuring your cost is low, embracing transparency, and using a flexible ticketing system, you can strike a balance that benefits both your event’s financial health and your patrons’ wallets. If you would like to learn more, you can visit us at TicketPeak