Making Ticket Refundability The Customer’s Choice

When conversations about demand based pricing for the performing arts comes up, there is often a comparison made to the airlines and the way they factor in dozens of variables when they price their seats. One airline practice that doesn’t get mentioned is the refundable fare where you pay more in return for the right to cancel the ticket.

The right to exchange, and sometimes even get a refund for tickets, has long been a benefit extended to performance subscribers. Now that subscription sales are fading, perhaps it is time to think about applying it to single tickets?

The thought came to me when I was reading an story on a Microsoft blog about The company is heavy into dynamic pricing to the point where the price of an item changes while it is in your shopping cart as variables are factored.

One of the ways people can lower the price of an item is to agree not to return it.

At checkout, customers can waive the right to return certain items, driving the cost down further; choosing one credit card over another — or paying directly from a checking account — takes dollars off, too. The system also suggests purchasing combinations that can save customers money.

With greater control over these variables, shoppers can strike their own personal balance between cost and convenience, something Lore’s team saw as missing in the industry. “The whole concept of Jet is to make transparent all of the costs that go into an e-commerce transaction, and then empower consumers to pull out costs as they see fit.

So what if you offer the opportunity to return tickets for an extra $5-$10 per ticket charge?

Generally the motivation for not allowing returns is fear of not being able to resell a ticket. There are also the labor costs and credit card transaction fees associated with processing a refund. Having different pricing makes the economics of all this more transparent and shifts some control to the purchaser.

If you do decide to allow a refund on a ticket sold as non-refundable, the rationale for a fee is clear. I know some performing arts organization charge an exchange fee which can seem punitive. In the context of this type of discount program, it can seem less so since the customer was offered the choice and the price difference has already been discussed.

I am not advocating this as a new source of income. There are social and emotional transactions that occur during the refund process, the results of which may not be directly correlated to whether a full refund was granted or not. It is better when the subject never comes up, regardless of whether you are generating any income from the exchange.

Still, it is something to think about. Especially if the choice of a discount in exchange for waiving the ability to make a return becomes more widespread and familiar.

If such an approach is implemented, it would definitely need to be handled at the time of sale from the positive perspective of “All our tickets are refundable, but you can get an additional discount if you don’t think you will want to exchange/refund,” rather than a more negative, “it will be an additional $10 if you want to be allowed to get a refund.”

Airlines handle it in the latter manner. Just think how much happier you would be if the $500 ticket were only $300 if you waived the right to a refund.

Airlines can’t really it that way because people initially hunt for the lowest price. They gain advantage from advertising the lowest price and adding costs as you choose options.

Price hunting doesn’t factor as much into the decision about which production to see so arts organizations have a little more flexibility in that respect.

I would be curious to see if a higher level of satisfaction might result from implementing this type of pricing. Would people feel more satisfaction secure in the knowledge they can either get a refund at any time or having gotten a great discount to something they fully intended to see anyway?

I imagine it would depend on the demographics of the community. Younger people and families might appreciate the low risk flexibility. More established audiences might view the unorthodox approach and additional level of pricing as confusing.

About Joe Patti

I have been writing Butts in the Seats (BitS) on topics of arts and cultural administration since 2004 (yikes!). Given the ever evolving concerns facing the sector, I have yet to exhaust the available subject matter. In addition to BitS, I am a founding contributor to the ArtsHacker ( website where I focus on topics related to boards, law, governance, policy and practice.

I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (

My most recent role was as Executive Director of the Grand Opera House in Macon, GA.

Among the things I am most proud are having produced an opera in the Hawaiian language and a dance drama about Hawaii's snow goddess Poli'ahu while working as a Theater Manager in Hawaii. Though there are many more highlights than there is space here to list.


6 thoughts on “Making Ticket Refundability The Customer’s Choice”

  1. Interesting idea, but sort of the opposite of subscriber pricing, where the subscriber gets both exchange privileges and lower pricing for buying the whole season—more like frequent flier benefits than like premium fares for refundable tickets.

    I haven’t seen a reduction in subscriber sales in the local theater company I subscribe to—they have been selling out of their shows and having to add extra shows for the non-subscribers. That may change when they move to a bigger theater next month, but the new space will probably just allow further growth.

    Having free ticket exchange for subscribers avoids a lot of the “what if I have a conflict that weekend” concern that blocks many from subscribing.

    • Well revel in your subscribers. That isn’t the norm. The subscriber base of the theater I am at isn’t too bad, but it slowly shrinking.

      In some respect, subscriber exchanges doesn’t make economic sense. You allow a practice that costs labor-wise to the people who pay the least. The rationale, of course, is that these people are giving you their money upfront as well as their long term commitment. Technology makes the labor costs lower than back when everything was done with hard tickets in racks.

      • Not “my subscribers”. I’m one of the relatively new subscribers (just started for their 2014-15 season). They do say that they get about 90% of the subscribers returning each year, plus several hundred new subscribers, but given that this is a theater audience, I figured that a 10% attrition rate was pretty much what you would expect for people dying or entering nursing homes. Their subscriber base is growing because they are putting on the best theater productions in the area, and because they started out quite small—I suspect that they’ll stop growing because they’ll have all the local theater goers within five years. Picking up a non-local audience will be much more difficult.

        The perks that get people to subscribe early and resubscribe: first choice of seat assignments, free exchange of tickets (as long as there are open seats in another day for the same show), slightly lower price than separate tickets, guaranteed seats, even for shows that sell out.

        They are moving to a new, larger space this month, so there may be fewer shows that sell out, which might reduce slightly the attractiveness of the subscription.

        A large theater that has empty seats at most shows would not provide much incentive to get a subscription—people would assume that they could get tickets for a show after seeing the reviews, and only go to a few.

        Having an audience consisting mostly of subscribers also means that even plays no one has heard of get good attendance, which allows the theater to do several lesser-known works, rather than just the standards.

  2. Hotels are already doing this if you buy on-line with a non-cancellation policy – it’s cheaper. A premium is added if you want the flexibility of canceling/exchanging.

  3. I have not been in the ticketing business for about 10 years, but I was a Director of Ticketing for almost 18 years before dropping out. I have seen the ups and downs of subscriber trends, and would say that giving up benefits, traditionally reserved for subscribers, to single ticket buyers seems a way to guarantee your subscriptions will continue to decline. Converting single ticket buyers into subscribers is really not that complicated, but it does take patience and world-class service. A single ticket buyer who finds themselves in need of making an exchange, or needing a refund, is an opportunity for you to interact with that patron and show them why they should want to be more of a contributor to what you do. If you just give them a built in mechanism for getting that refund, simply because they paid more for the ticket, you’ll lose that interaction and you turn more of what you do into a transaction and less of a relationship.


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