(Photo credit: Olu Eletu via Unsplash.)
Whether you’re new to the industry or a seasoned pro, service fees are a game-changer.
Many long-time travel professionals who hadn’t previously charged a service fee might find fees strange. Others may feel they’ll lose their clients if they start charging a fee. Newbies often feel like they don’t have enough experience to warrant a fee.
So why charge a service fee? I have two very good reasons.
Charging a service fee adds value.
You’re an expert, and your knowledge, experience, and opinion is worth something.
As consumers, we pay doctors, lawyers, and financial planners for their services. As a travel expert, charging a fee is how you transition from acting like a travel agent to acting like a travel expert … with value.
The word “agent” makes us sound like we're order-takers. But we don’t just take orders; we make dreams come to life, we create memories, and we turn passions into journeys.
So, value that!
Because it’s another revenue stream.
This makes good business sense. You can increase your annual revenue by $10,000, $15,000, or even $25,000 just from charging service fees.
I don’t know of anybody who doesn’t want to add an additional five figures to their annual income.
Now, that we’ve take a look at why we should charge a service fee, let’s take a look at the do’s and don’ts for charging these fees.
When should you charge a fee?
There's no black-and-white answer. Charging a service fee is more an art than a science.
You must come to a decision in advance when it’s appropriate to charge a service fee. Be consistent, and always establish clear boundaries around when you will charge a service fee and when you won't, realizing that many people charge a fee every single time.
Charging a fee is a great, elegant way to turn down business that isn’t going to be profitable.
Haven’t we all had those procrastinators that come to you on Dec. 1, and want to escape the cold over Christmas – six people, a $2,000 budget, and luxury, if you please?
This is where you can respond with something like: “Thank you so much for thinking of me. When it comes to all things tropical, I am your gal/guy. And it seems like budget is a big priority, so if you want to avoid paying my $250 service fee, my advice is to book online. My favorite online resource for something like this XYZ, and when you do have a bit more flexibility on your budget, please be sure to reach out to me again. Thank you so much, and have a wonderful day!”
Using a service fee to help you separate the people who value you from the people who don’t will be a great relief – and a fantastic way of promoting your business.
When should you not charge a fee?
Since charging a fee is an art and not a science, there’s no black-and-white answer to this question, either.
However, since you have complete flexibility on when you want to waive a fee, you could use a fee as a negotiating tool on an as-needed basis.
Don't overuse this ploy; the more comfortable you become with the idea of devaluing your service, so will your customers.
Over the holiday season, many travel businesses like to run promotions and deals. If you’re considering waiving your service fee as a way of promoting your business, realize that by doing that, you’re devaluing yourself big time!
You will not only drain yourself running around trying to make things happen, but once you start waiving fees on a regular basis, it’s hard to reinstate them after the holidays, when it’s back to business as usual.
In general, once you’ve started charging fees (if you haven’t already), you’ll quickly wonder why you hadn’t before. As you move forward to collect these fees, people will decide whether they want to move forward with you as their travel coordinator.
Once they do, contractual issues may arise. Always protect yourselves and your business with errors-and-omissions (E&O) insurance. Our friends at BHTP have E&O protection that can cover you and your business as well!
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