Booking commission vs subscription: what a booking system really costs

Two ways booking systems charge

When you compare booking systems for a tour or activity business, the headline prices are hard to compare because providers charge in different ways. Broadly there are two models, and many providers mix them.

The first is commission, also called a booking fee or transaction fee: the provider takes a percentage of each booking, or a fixed amount per booking or per traveller. Some charge only commission; others add a monthly fee on top. The second is a subscription: a fixed monthly or annual price for the software, with no percentage of your bookings.

Card processing fees are a separate cost that applies in both models. Your payment provider charges them for moving the money, whichever booking system you use. When you compare quotes, set processing fees aside and compare the booking system's own charges.

How each model works in practice

Each model has its own logic, and neither is automatically better. Here is how they compare:

• Commission: you pay little or nothing in a quiet month and more in a busy one, so the cost follows your revenue. The downside is that it grows with every booking, including repeat customers and bookings you won through your own marketing.
• Subscription: you pay the same amount whether you take 10 bookings or 1,000, which makes the cost predictable and makes growth cheaper per booking. The downside is that you pay in your quiet months too.
• Hybrid: a lower monthly fee plus a smaller percentage. This softens both effects but means you have to model two variables when you compare.
• Traveller-paid fees: some systems add a booking fee to the traveller's total instead of charging you. Your margin is protected, but the traveller pays more, which affects how competitive your prices look.

A worked example across a year

Take a day tour operator who takes 250,000 dollars of online bookings a year, with a clear season: 6,000 dollars a month in the four quietest months, 18,000 dollars a month in the four shoulder months and 38,500 dollars a month in the four peak months. The figures below are illustrations for comparison, not any provider's prices.

Option A charges 3% commission and no monthly fee. That costs 180 dollars in a quiet month, 540 dollars in a shoulder month and 1,155 dollars in a peak month, or 7,500 dollars for the year.

Option B charges a flat 150 dollars a month with no commission. That costs 1,800 dollars for the year, whatever the season.

Option C charges 60 dollars a month plus 1.5%. That costs 150 dollars in a quiet month, 330 dollars in a shoulder month and 637.50 dollars in a peak month, or 4,470 dollars for the year.

In the quietest months, commission (Option A) is only slightly more than the subscription. Across the year it costs 5,700 dollars more, almost all of it earned in the peak months when you are busiest.

Find your break-even point

The simplest way to compare a percentage with a flat fee is to work out the monthly booking value at which they cost the same. Divide the monthly subscription by the commission rate.

In the example above, 150 dollars divided by 3% is 5,000 dollars. Below 5,000 dollars of online bookings a month, the commission model is cheaper; above it, the subscription is cheaper, and the gap widens with every extra booking. For a hybrid plan, compare the difference in monthly fees with the difference in percentages: Option B against Option C is 90 dollars divided by 1.5%, so 6,000 dollars a month.

Work this out for your busiest month and for your annual average, not only for your quietest month. A model that looks cheaper in February can be the expensive choice once you count the whole year. And if you plan to grow, run the numbers on next year's target as well as this year's figures.

Who pays the fee, and what travellers see

Some systems let you pass the booking fee to the traveller as a separate line at checkout. That can look like a way to make commission free, but it has costs of its own.

First, the traveller sees a higher total than the price on your tour page, and an unexpected extra at checkout is a common reason people abandon a booking. Second, in many countries consumer law requires the advertised price to include unavoidable fees, so a fee added only at the final step can create legal risk as well as lost sales. Third, if a competitor shows an all-in price of 85 dollars and you show 82 dollars plus a 3 dollar fee, you are no cheaper, but you look less straightforward.

Fees that reflect a real cost, such as a park permit or a conservation charge, are a different matter. Show them clearly, include them in the advertised price where the law requires it, and explain what they are for.

The costs that are not on the pricing page

Commission versus subscription is only part of the total cost. Before you decide, check these less visible items:

• Fees on bookings that never touch the booking system's checkout, such as phone, walk-in or agent bookings you enter by hand. Some providers charge commission on these too.
• Whether a full website is included or only a booking widget you must embed in a website you pay for separately.
• Paid add-ons for features you will need, such as deposits, gift vouchers, waivers, extra team members or reseller connections.
• Set-up, onboarding or migration fees, and whether they are charged again if you change plan.
• Payout timing: whether money goes straight to your own payment account or is held by the provider and paid out later, which affects your cash flow.
• Contract length and notice periods, and whether annual billing is required to get the advertised price.
• Export: whether you can download your bookings and customer list in a usable format if you leave.

Which model suits which business

There is no single right answer, but a few patterns are useful:

• A brand-new business with very few bookings may find commission easier at first, because it costs little until bookings arrive. Set a date to review it once you pass the break-even point.
• An established operator with steady online sales usually saves money with a subscription, and the saving grows as the business does.
• A highly seasonal business should compare the full year, not single months. A subscription often still wins over twelve months, even after paying through the quiet season.
• A business that sells mainly through marketplaces and resellers already pays commission to those channels, so avoiding a second percentage on its own direct bookings is worth a great deal.
• A business that wants to build direct bookings over time benefits from a model in which each additional direct booking costs nothing extra.

Questions to ask any provider

Ask every provider the same questions in writing, so you can compare like with like:

• Is there a fee per booking or per traveller, and what is it as a percentage of an average booking?
• Does the fee apply to bookings entered manually, to agent bookings and to bookings taken in person?
• Is the fee charged on the deposit, on the full price, or on refunded bookings too?
• Which features are included in the price you were quoted, and which cost extra?
• Is a booking website included, with your own domain?
• Where do payments go, and how quickly do they reach your bank?
• Can you export all your bookings and customers at any time, at no cost?

How Tourtify charges

Tourtify is a flat monthly subscription and takes no commission on your bookings, so a busy month costs the same as a quiet one. Your booking website is included, and payments go straight to your own payment provider account, which charges its usual processing fees. If you need to add a genuine fee, such as a park permit or service charge, the Booking fees plugin adds it per booking, per traveller or as a percentage, shown as its own line and included in advertised prices.