One morning last week with toast in one hand, coffee in the other, BBC breakfast were interviewing a spokesperson for the airline industry. The said spokesperson was being asked to justify the service charges being levied on people buying airline tickets online. The presenters were asking why people were being charged so much when they had already bought a ticket for over £100. The spokesperson responded by saying that they are just passing the fees charged by the Banks onto the customer. The presenters then asked why the airline industry, and certain other industries like Theatre Tickets, used service charges when other industries do not. The spokesperson then came out with some drivel about transparent pricing...

So what about Theatre Tickets? Why do we charge a service charge?

As the Web Developer for theatredelicatessen, and the founder of RapidTicketing, I have quite an inside view into online sales and Bank charges. Our current checkout provider - Google Checkout - charge 3.4% of the transaction amount + 20p per transaction. For a £12 ticket (plus a 50p service charge) this amounts to a fee of 63p. If you then multiply this by an average years audience of around 1500 people, this 63p becomes £945.

This shows that it would cost theatredelicatessen nearly 100 tickets worth of money by offering tickets online if they did not add a service charge. They could, of course, just make all tickets £12.50 and then not charge a service charge. But then people buying tickets on the door would be paying for a service that they were not using.

Product based industries deal in fixed commodities. If you sell laptops, you know how much each of the components cost. You know how much it will cost to build the laptops and how much to ship them. You're dealing with a lot of knowns. Then when you come to sell the laptop, you have as long as you like to be able to sell it. You can reduce the price right down to the cost of the components and still break even.

In service industries, where tickets are sold for specific time slots, there are a lot of unknowns. How much, per ticket that you may sell, does each of the components cost? Without knowing how many tickets you will sell you cannot know this. When you price your ticket, there is a lot of guesswork. You want to make your ticket as cheap as possible in order to sell enough tickets as possible. By adding the service charge into the price of the tickets you may put people off and this will not help you reach your goal of breaking even, especially if people can still buy tickets at the door to avoid a service charge.

In short, the service charge levied on Theatre Tickets, by our service at least, is a transparent means of recovering the costs of providing an online ticketing system to the public, whilst making tickets available on the door at the lowest price possible. Others (sounds like "ticket vaster") may charge £2 per ticket and then £1.80 to collect the said ticket, but that would just be profiteering!