Understanding the Reason Behind Convenience Fees in Ticketing Services

The convenience fee charged by platforms like BookMyShow is primarily to cover the costs associated with providing a seamless online booking experience. Here are some reasons why this fee exists, particularly for ticketing services:

Operational Costs

Online ticketing involves various operational expenses including technology maintenance, payment processing fees, and customer support. The convenience fee helps offset these costs, ensuring that the platform remains efficient and user-friendly.

Service Features

BookMyShow offers features such as seat selection, real-time availability, and instant booking confirmations, which require significant investment in technology and infrastructure. The convenience fee contributes to maintaining and enhancing these features, ultimately improving the user experience.

Market Dynamics

The ticketing industry often has a different pricing model compared to services like bus bookings or mobile recharges. Ticketing platforms may face higher competition and operational challenges, leading them to implement convenience fees to maintain profitability.

Consumer Expectations

Users often expect a quick and easy booking process, which can require significant resources. The convenience fee can be seen as a way to enhance the overall user experience, ensuring that users can enjoy a streamlined and satisfying booking process.

Revenue Model

Some platforms like redBus or mobile recharge services have different revenue models, such as partnerships, advertising, or lower operational costs, which allow them to offer free services. In contrast, ticketing platforms like BookMyShow must charge a convenience fee to cover their operational costs and maintain their service quality.

Industry-Specific Considerations

However, the situation can vary significantly between different ticketing providers. For example, because many exhibitors give low or zero transaction fees to the platform, other ticketing services like TicketPlease, Kyazoonga, and even the cinema chains' own websites also charge a user convenience fee.

The Complex Movie Distribution Model in India

The reason for the convenience fee is deeply rooted in the complex movie distribution model in India, which varies quite a bit among states. Entertainment Tax, levied by the States, can go up to 45% of the gross ticket price. While the cinema or multiplex typically makes a very small percentage of the ticket price, it makes most of its money from Food and Beverages. There is nothing to share with an aggregator like BookMyShow.

Online Booking of tickets also incurs payment gateway charges, which can be around 2% of Rs 250, i.e., Rs 5. Hence, the convenience fee, which can vary from Rs 20 to Rs 50 or even more, plays a crucial role. It comes under Service Tax in India, which is 12.36, much lower than the Entertainment Tax.

Comparison with Other Ticketing Services

The other models you mentioned, like bus tickets and flight tickets, have a higher margin, a simpler distribution model, and a relatively lower tax burden. Therefore, the need for a convenience fee is less pronounced in these services.

Understanding these factors can help users and stakeholders better appreciate the economics behind ticketing services and the role of convenience fees in supporting these platforms.