Hot Topic: VAT
To react or not to react? That is the question...
Unless you've been hiding in a props cupboard or up a beanstalk for the last couple of days, you'll know that the UK standard VAT rate has been cut to 15%, effective 1st December 2008 - 31st December 2009. This poses some logistical problems when it comes to ticket pricing, at what is many organisations' busiest time of year. How to respond is a tricky issue, but here are our thoughts...
Firstly, if you are one of the organisations lucky enough to be VAT exempt, consider reminding your customers of this - make a virtue of the fact that you never did charge them VAT. Right now people will be holding off from all kinds of purchases, waiting for prices to react, and you need them to know that there's no point waiting until next week to buy tickets from you!
To change.
What about those of us who do charge VAT, and whose prices were set to cover it?
If you do want to change your prices, reflecting the cut exactly results in some tricky numbers. If you were charging a VAT-inclusive price of £20 for a ticket last week, £17.02 of that went to you, and the rest was VAT. So, if you keep that "true" ticket price of £17.02 and apply the new VAT rate, you get a price of £19.57. Not the tidiest of prices to deal with at the box office!
As an alternative, you could consider a blanket cut to prices of, say, 25p. Think carefully about this though; is a 25p drop worth promoting? Is it going to stimulate enough sales to justify the logistical hassle?
Or not to change.
When the changes will be so small, and probably few of your customers really think about whether your tickets are VAT-able at all, does it really make sense to change your prices? Many theatre companies, orchestras and venues will have published prices for next spring and beyond, and won't want to change them. At this point reacting or not reacting is a PR issue. There are several approaches you could take:
Make no changes to prices. Have explanations and justifications prepared for sales staff to communicate to customers, explaining that any changes would be both small and complicated to implement fairly.
Put the extra income generated into a specific fund (your education fund, for example, or something charitable - the more appealing the better). Then you can advertise this fact across all your sales channels.
Consider making no changes now but promising reductions or price-freezes when the next season goes to print.
Don't change prices, but offer some other kind of gesture - maybe a voucher for a discount against future purchases or ancillary sales.
Whatever you decide, it is worth communicating it quickly to your customers, even if your message is only "no change". If you stay silent, there is a danger that potential customers will be waiting for you to react, avoiding buying tickets this week and waiting to see if prices fall.
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