How are service fees calculated for tickets?

When purchasing tickets online or over the phone, buyers are often surprised by the additional service fees and charges added to the base ticket price. Service fees can add a significant cost to tickets, so it’s helpful to understand how they are calculated.

What are service fees?

Service fees, sometimes called convenience fees, are charges added to the base ticket price by ticket sellers and ticket marketplaces like Ticketmaster or StubHub. They cover the costs of ticket distribution and certain overhead expenses.

Some examples of service fees include:

• Order processing fees – For processing the ticket order
• Delivery fees – For digital or physical ticket delivery
• Facility fees – Charged by the venue hosting the event
• Service charges – For the ticket seller’s operational costs

The total service fees on an order can add 10-25% (or more) to the base ticket prices. Service fees are in addition to shipping costs for physical tickets.

Why are there service fees?

Ticket sellers and marketplaces charge service fees primarily to cover their operating costs and make a profit. Specific costs built into service fees may include:

• Wages for customer service, IT and other staff
• Online ticketing platform and technology costs
• Credit card processing fees
• Office space and overhead
• Marketing and promotions
• Profits for the company

Venues and event promoters may also charge fees to ticket sellers that get passed on as service fees. Common venue fees include:

• Facility fees – For maintenance, utilities and operations
• Royalty charges – For the performers
• Capital expenditures – For venue improvements or expansions

Service fees generate significant revenue for ticket sellers. In 2019, Ticketmaster’s parent company Live Nation made over $1.5 billion in revenue just from service fees.

How are service fees calculated?

There is no universal formula for calculating service fees. Different ticket sellers and marketplaces set their own policies. However, there are some common approaches:

Percentage of ticket price

Many service fees are calculated as a percentage of the base ticket price. For example, a ticket may have a 10% or 15% service charge added. The percentage may vary based on factors like:

• If the ticket was sold during pre-sale or general on-sale
• If the ticket is for the front or rear sections of the venue
• The base cost of the ticket

Higher percentage fees are often charged for more expensive tickets or last-minute purchases.

Flat per-ticket fee

Some service fees are a flat rate per ticket, such as a $5-$10 charge per ticket. The fee doesn’t vary based on ticket cost. Per-ticket fees help cover fixed costs like order processing and delivery.

Dynamic and demand-based pricing

Many ticket sellers use dynamic pricing, meaning service fees can change frequently based on demand. Fees are higher during peak sales periods to maximize revenue. For example, fees for a popular concert may start low during the pre-sale period and gradually increase as more tickets sell.

Tiered service charges

There may be multiple service charges added to an order, with separate fees for processing, delivery, facility, etc. Some fees are fixed amounts while others are percentages.

Order-based fees

Instead of per-ticket fees, some sellers charge service fees per order. There may be a flat order processing fee plus a percentage of the total ticket cost.

Maximum caps

Many ticket sellers set maximum limits on the total service fees applied to a ticket order, such as capping fees at 25% of the ticket prices. This prevents fees from exceeding a certain dollar amount.

Other factors affecting fees

Beyond the base calculation methods, there are other factors that can impact service fees including:

• Sales channel – Fees are highest for phone and online orders vs. box office purchases
• Delivery method – Digital delivery has lower fees than physical ticket shipment
• Payment type – Fees are higher for credit card payments vs. debit or cash
• Memberships/promotions – Loyalty club members or coupon holders may get fee waivers or discounts
• Group sales – Special bulk order rates may reduce the per-ticket fees

Itemized breakdown of fees

Most major ticket sellers now provide an itemized breakdown of all the service fees and charges added to an order. This shows the different components making up the total fees. Here is an example itemization:

The breakdown shows the different fixed and percentage-based fees that comprise the total service charges. Having transparency into the fee components helps explain the final amounts.

Strategies to reduce service fees

While service fees are mostly unavoidable, there are some tips to minimize them:

• Buy at the venue box office to skip online convenience fees
• Get tickets during pre-sales which usually have lower fees
• Buy group tickets for a discount on per-ticket fees
• Use fee waiver promo codes when available
• Join fan clubs or mailing lists for fee presale codes
• Choose e-ticket delivery instead of physical tickets
• Use a ticket reseller with lower fees like StubHub
• Pay with a debit card or cash instead of credit card

For very high-demand events, fees may be unavoidable. But for most events, shopping around and timing your purchase strategically can save on fees.

Are service fees refundable?

In most cases, service fees are non-refundable if you need to cancel your ticket purchase or cannot attend the event. The fees cover the costs of processing the original sale, so those cannot be recouped. Refund policies vary between sellers, but in general expect to only get the base ticket price back.

For canceled or rescheduled events, some sellers provide a refund of the full ticket cost including fees. Check the fine print when purchasing tickets to understand the refund policy.

Are service fees tax deductible?

If the ticket purchase is for a business purpose, service fees may be tax deductible as a business expense. Fees related to personal entertainment ticket purchases are generally not deductible though. Consult a tax professional to be sure if service fees apply to your situation.

The future of ticket service fees

Consumer frustration over add-on fees has led some ticket sellers to rethink their pricing models. Some options emerging include:

• All-inclusive pricing – No separate fees, just one total ticket price
• Unbundled fees – Letting customers opt out of certain fees
• Fee caps – Limiting fees to a maximum dollar amount or percentage

However, fees remain an important revenue stream in the ticketing industry. With high operating costs, most experts expect fees to persist in some form over the long-term.

Conclusion

Service fees on event tickets can be confusing and frustrating for consumers. While the specific calculations vary, the fees primarily exist to cover sellers’ costs and generate additional revenue. Having transparency into the different components of fees helps explain the charges. While fees will remain common, consumers have some options to reduce fees through strategic purchasing and avoiding convenience charges when possible.