Arts and Entertainment
Secondary Ticket Pricing Explained: Face Value Versus Fair Market Value
- Written by Nicci Francis
When you buy concert, sport, or theater tickets through the box office, you generally pay the "face value"-that is, the price that is printed on the ticket. However, when you are unable to buy through the box office, as in the case of sold out events, you may have to buy your ticket on the secondary market. If this happens, you may find that you pay more or less than the printed face value.
Why the discrepancy?
To understand the difference, you must first understand the difference between the "face value" and the "fair market value." Basic high school economics taught us that the fair market value of a product is determined by supply and demand. As demand for a product increases and the supply diminishes, the price of the product is driven higher.
Essentially, an entertainment ticket is a product. When it first goes on sale at the box office, prices are generally based on the desirability of seating. For example, VIP tickets will be priced higher than those for general admission. Within each section, prices are static. However, supply is limited. Once the box office supply is depleted, the event is sold out. There is no longer any supply to meet the demand. At least, not from the primary sellers.
At this point, a consumer has two options facing the limited supply and his or her demand for the ticket:
- Give up on the ticket and miss out on the event.
- Pay the fair market value of the ticket-or the price that is now set by the demand for the ticket in the face of limited supply.
The secondary ticket market is made up of ticket brokers and individuals looking to unload tickets for events they are unable to attend. Buying tickets from a friend who is unable to use them is one form of the buying on the secondary ticket market. Buying from a broker or an online ticket website is another form.
When buying tickets on the secondary market, one must determine what the value of that ticket is to him or her personally. For a die hard fan, that value may be very high. For a casual fan, the value may not be as high. No longer is the price determined by face value, but by the demand for the ticket and its inherent worth to the individual consumer.
For some ticket buyers, waiting in line all night to get tickets when the box office first opens may be a sacrifice he or she is willing to make in order to get the lowest price. Others may rather wait and possibly pay more for a sold out event ticket to avoid camping out on a sidewalk. Again, the question is what is this ticket worth to the individual consumer?
The fair market value of a ticket is in constant flux, and, based on a number of factors, may be driven above or below the face value of the ticket:
- Tickets to popular sold out events will generally sell above the face value
- Tickets to sports events for teams having a losing season often sell below face value
- Last minute tickets may sell below face value as individuals look to recoup some of the cost for tickets they cannot use
- A team who outperforms expectations or suddenly hits a winning streak may drive up the value of game tickets
- Major events in high demand often carry not only higher initial prices, but also higher resale value
A ticket's value is determined by more than its price. Surprising your daughter with Taylor Swift tickets or taking your loved one to the concert of his or her dreams may bring a personal reaction that far exceeds any price you could place on the ticket.
Tikkitz is a secondary ticket market featuring online and mobile access to concert tickets, sports tickets, and theater tickets. Visit http://tikkitz.com for more information.