Festival math

A couple of weeks back, we had the following posted to our Facebook wall:

"Why are your concerts catered to younger folks so damn expensive? Who are you really catering to? Are you trying to alienate the younger jazz lovers in Toronto?"

Which is sort of a funny post - of course we're not trying to alienate anybody. But the point is valid. How much is too much when it comes to setting prices for concerts at the festival?

I thought I would address the issue in a couple of ways. First, a quick look at some other concert listings reveals that:

• If you want to see Enrique, JLO, Wisin & Yandel, Enrique Iglesias, Jennifer Lopez and Wisin y Yandel at the ACC on July 17, you'll be paying between $41.25 and $161.25
• If you want to see Coldplay at the ACC on July 23, you'll be paying between $45 and $135
• If you want to see the Dave Matthews Band at the Molson Amphitheatre on July 2, you'll be paying between $63 and $96.50
• If you want to see Fiona Apple at the Sound Academy on July 4, you'll be paying $67.50

So from a comparison standpoint, our ticket prices are actually in line with some of the other concerts happening around the city.

But how exactly do we decide on our ticket prices? Several factors are involved. Let's do some festival math.

First and foremost is the artist fee. Let's look at an example of an artist charging a fee of $25,000. That artist has 15 people traveling as part of their tour, and we need to provide accommodations for each person - let's estimate $200 per room per night, or an additional $3,000. So right away we're looking at $28,000 in expenses.

In order to cover our costs for this artist, we'll likely need to sell about 1000 tickets. For a venue with a capacity of 1000, we're likely looking at a production bill (hall rental, backline, sound crew, etc.) of at least $5,000, so let's say our overall expenses on the show are now about $33,000, without taking into consideration any marketing costs or additional staff requirements.

So if we have 1000 tickets to sell, and an expense of $33,000, in order to break even on the show we need to make $33 on every ticket we sell, and we need to sell them all. But there are a couple of charges we can't control: taxes and facility fees. HST on a $33 ticket is $4.29, and let's assume a very low facility fee of $2.50 per ticket. In order to make $33 on each ticket we sell, we actually need to sell it for $39.79 (which we'd round up to $40).

But that's just to break even, and that assumes we'll sell all 1000 tickets. Prudent budgetary practices suggest that we be a bit conservative on the number of tickets we'll sell, so let's say we plan to sell 800 tickets, not 1000. Now, in order to break even, we need to make $41.25 on each ticket...which means after taxes and facility fees each ticket will sell for $49.11 (which we'd probably round up to $49.50). To sum up (based on 1000 tickets):

$25,000 artist fee
+ $3,000 accommodation costs
+ $5,000 production costs
= $33,000 concert costs
/ 1000 tickets
= $33 per ticket
+ $4.29 HST
+ $2.50 facility fee
= $39.79 per ticket, rounded up to $40

The same math is used for every show, whether an artist's fee is $1,000 or $100,000. And remember - that does not include costs like marketing (brochures, advertising, website), staff salaries, insurance, etc. Our generous sponsors and government grants go a long way to offsetting these additional costs, but ticket revenues are vital to the overall success of the festival each year.

Deciding on the right venue for an artist and the right ticket price is a complicated matter and decisions are not taken lightly. We want to ensure greatest access to our ticketed shows, while being fiscally responsible and ensuring the long-term feasibility of the festival.

If you've got more questions about how the festival runs - from how we choose artists to how we set pricing to my sometimes dubious fashion sense - I'll be doing a live Q&A on Twitter (@torontojazzfest), Wednesday, June 6, 7-8 pm. Join me live online next Wednesday or send your questions in advance via Twitter, Facebook or email.

Josh