The Fee Question
I had just finished presenting my Selling to the Affluent Traveler seminar at a recent industry conference, when one of the attendees asked the question, “Dan, how do you feel about fees?” This is a loaded question and, while it was outside of the scope of the program, everyone in the room was waiting for my response.
“I love fees!” I replied, to which you could almost hear a collective sigh of relief. “Especially service fees, but in my opinion,” I continued, “you should only charge planning fees if you are adding value to the purchase!”
To charge a planning fee or not is a subject as hotly debated as any. There are valid arguments supporting both sides. Assuming that you have a specific skill or expertise that differentiates you or your agency, customers are seeking you out, or you are planning a “Planes, Trains, & Automobiles” FIT itinerary – by all means, charge an upfront planning fee. Don’t be shy either, a minimum of $100-$150 per hour will help weed out those who think all travel agents are equal. You are adding value to the purchase, and should be compensated whether the prospect buys from you or not.
This differs from the “shopper” who is requesting a price on a cruise or tour. Your ability to simply quote a price is not just a basic service expectation, but also an opportunity to showcase your talents. Luxury buyers, in particular, do not have an aversion to fees. In fact, they are used to paying them for a variety of services outside of travel, so they tend to expect them.
This is a very competitive business, and not everyone is comfortable with, or adds sufficient value to justify charging upfront planning fees. However, the real opportunity where most agents are missing the proverbial boat is charging “Change & Cancellation” service fees. Every time you touch a booking it is money out of your pocket. By placing a value on your services, you have already differentiated yourself from the pack. So take a lesson from our good friends at the airlines who have mastered this art, and create a fee list. Post it on your website, including the terms & conditions, on your invoices, and as part of the qualifying process.
Below is a situation that comes up frequently:
You have booked a customer on a cruise for $1500 per person. They call a couple of months later, having received an email from the cruise line reducing the price for same category to $1100. If possible, you will try to get them the price, but in doing so, you will lose the commission on $400. Assuming you earn 13%, that’s a loss of -$52 or -$104 for the cabin. Now you are doing twice the work for $104 less than you originally agreed. Make sense? Not to me. The objective is to do less for more, not the other way around.
Assuming you were upfront with your fees, the customer will expect you to charge for this change. In fact, they have probably already done the math themselves to make sure they are still coming out ahead.
Here is where it gets fun! Let’s say the change fee is a very reasonable $100 per person. You re-book the cruise for $1100 p/p plus the $100 p/p fee. The customer gets a net price (including your fee) $300 less of $1200 and you will earn almost $100 more on the booking than if no changes were made.
You deserve to be compensated for the work you do – all of it! Many agents will claim to charge fees, but waive them out of fear of losing the booking entirely. Here is the thing, you must follow through and actually charge them. If there are no consequences to their actions, this whole exercise will be a waste of time (and money). It’s incredibly easy to set up a PayPal, Strip, or Square account to collect. Otherwise, you are leaving money on the table. There is no excuse.
Remember, the key is to disclose the fees upfront and you shouldn’t have a problem collecting. Charging fees of any kind sends a simple message: “you are travel professional, not just a travel agent!”
Follow this simple procedure, and you will be on your way to greater profitability!
Dan Chappelle helps travel sales professionals achieve full potential by transforming their mindset and focusing on fundamentals to produce real results. He speaks internationally on strategic business development in the travel & tourism vertical. His signature keynote & workshop “Secrets of Selling to the Affluent Traveler” helps organizations, entrepreneurs, sales professionals, employees, and business owners gain meaningful competitive advantage.
His new book “Get Your S.H.I.P Together – The Wealthy Travel Agent Guide to Sales” is now available on Amazon.com in both paperback and Kindle versions. For information on Dan’s education and sales programs, visit www.WealthyTravelAgent.com