Gilded Balloon has unveiled the move after revealing plans to expand into the Counting House complex from its long-time Teviot Row House headquarters in the capital’s south side.
Gilded Balloon founder Karen Koren, who first staged shows in the Counting House 25 years ago, has also vowed to try to turn it into a year-round venue.
The surprise move to take over the venue for this year’s festival has upset supporters of the “Free Fringe” movement after it grew to become one of the most popular venues where audiences do not need a ticket to take in a show.
But Ms Koren insisted there would be a different model introduced at the Counting House from her main venue this summer, which would still allow audiences to enjoy shows for free if there was spare capacity.
Audiences will be able to pay anything between £5 and £10 to secure a ticket for shows at the venue.
However they can also take a chance by turning up and securing free entry on the door if there is room available.
As happens in “free” festival shows at present, audience members will be asked to make a donate when they leave the venue.
The “pay what you want concept” was introduced to the Fringe several years ago by promoter Bob Slayer, who wanted to offer “a more creative alternative to the money and marketing focused comedy industry that consistently puts acts into debt.”
One his most-popular acts, Adrienne Truscottt, went on to win one of the top honours at the Foster’s Edinburgh Comedy Awards in 2013.
The expansion for the Gilded Balloon this summer has been unveiled just months after it celebrated its 30th anniversary.
Ms Koren, who was honoured at the Foster’s awards ceremony last summer for her contribution to the comedy industry, had earlier announced that her daughter Katy was being lined up to take over her Gilded Balloon empire, which has helped launch the careers of Tim Minchin, Dylan Moran, Peter Kay and Bill Bailey.
The move to the Counting House by Gilded Balloon this summer will come at a time when Bristo Square, the main public space outside Teviot Row House, is still closed off for a multi-million pound refurbishment.
Gilded Balloon shows are already staged throughout the year in the new studio theatre which was built onto the nearby Festival Theatre three years ago.
Ms Koren said: “When the Counting House agreed to work with Gilded Balloon again this year I was thrilled.
“I have so many wonderful memories of the times I had there from 1991 when I first started it as a year round Comedy venue.
“Eddie Izzard, Lee Evans, Phill Jupitus, Meera Syal and many of the UK’s now favourite comedians all performed there at the start of their careers.
“I am so happy to have been given this opportunity to return and hope one day to be able to turn the Counting House back into one of Edinburgh’s year round ‘go to’ comedy venues.
“We are running a different model than Teviot in that we will sell tickets at a maximum ticket price of £10 and a minimum of £5 to secure a seat.
“Customers can come in without a ticket if there is room and pay what they want with a bucket at the end. However, ticket holders would have priority.”
Comedy blogger John Fleming has been among those to express dismay at Ms Koren’s move to snap up the Counting House, which dates back to the mid-18th century.
He said: “The Gilded Balloon link with the Counting House was over 20 years ago.
“As far as I am aware, the Gilded Balloon’s tenure during the Edinburgh Festival Fringe at its Teviot building is still renewed on a year-by-year basis. So what they have done logically means that they could have no objection if other operators put in higher bids for the Teviot building.”