When you become a travel agent, one of the pressing decisions you will have to make is whether or not you will charge a service fee. This decision can cause a lot of angst, especially for someone brand new to the business. Newbies often feel like they don’t have enough experience to warrant a fee. And it’s not JUST the newbies that battle with this decision. To people who have been in the industry for many, many years, charging a fee can feel foreign to them. Why would their clients begin paying a fee when they haven’t had to pay one for many years? Others fear that they will lose clients to another travel professional who doesn’t charge a fee.My answer to the first question, when I become a travel agent, should I charge a service fee? is an emphatic yes. But I will admit, this is my opinion. It’s not the law :) In this article, I share Why, When (and When NOT to) and How Much to charge a service fee.
Why Charge a Service Fee?
I have 3 very good reasons for you:
- Because you are an expert and you are adding value. Your wisdom/experience/opinion is worth something. As consumers, we pay doctors, lawyers, financial planners, interior designers, etc for their wisdom/experience/opinion and service. As a travel expert, charging a fee is how you transition from acting like a travel agent to acting like a travel expert…an expert with value.
- Because it is another revenue stream. It just makes good business sense. I personally know travel experts who increased their annual revenue by $10,000, $15,000, or even $25,000 directly from charging service fees. I don’t know anybody who doesn’t want another 5 figures added to their bottom line.
- It’s a great way to filter out the price-shoppers, bargain hunters and time-wasters. Give your prospects a little hoop to jump through so you don’t waste your time.
When to Charge a Fee?
There is no black and white answer to this question, because charging a service fee is more of an art than a science. You must come to a decision ahead of time as to when you will charge a fee. My advice is to be consistent and have very clear boundaries around when you charge a fee and when you don’t. Travel professionals that have had the most success charging fees, charge a fee every. single. time.As a side note, charging a fee is a great and elegant way to turn down business that isn’t going to be profitable. For example, if someone comes to you asking for help with renting a 2BR condominium in Myrtle Beach for 2 nights and doesn’t want to spend more than $500, you can respond back with something like this: “Thank you so much for thinking of me. Myrtle Beach condo rentals are not within my scope of expertise. If you were going to Italy for 2 weeks, I’m your gal. And it seems like budget is a big priority so my advice if you want to avoid paying my $250 service fee is to book this online. My favorite online resource for something like this is www.vrbo.com. And when you do need help with something that falls within my area of expertise, please be sure to reach out to me again. Thanks so much for reaching out.”
When NOT to Charge a Fee?
Since charging a fee is an art and not a science, there is no black and white answer to this question either. However, you CAN use the act of waiving your fee as a negotiating card in your back pocket. For example, you might have a request for something super simple that will not require much work on your part. You can respond with something like, “Thanks for thinking of me! I’m going to waive my normal $250 service fee because I love working with you so much.” Other times you can use this response include:
- your best existing clients;
- referrals of your best existing clients;
- potentially good client that feels like they are price shopping.
How Much Should I Charge?
I will say it one more time - charging a service fee is an art and not a science so when deciding how much to charge, you will have to decide on something with which you feel comfortable. But I also know it can help to know what others charge. The travel experts with the most success charge more than $125. Many start at $125 or $150 and quickly move up to an amount more like $250 or $300. And it depends…on how many travelers, how complicated the itinerary is, whether flights are included or not, etc. So a good suggestion I have for you is to decide upon an amount and tell your client that it will cover the first 5 hours of work. If your planning time exceeds that, you will charge again. You could also decide to charge per person. Many people do this with flights.
If you are not charging service fees but feel you should because you’ve recently been burned by shoppers who tapped your brain but booked elsewhere, decide today that you will charge service fees. Just do it! And if you are feeling a little anxiety, reach out to another travel professional that DOES charge service fees and ask them all these same questions. At Gifted Travel Network, we openly encourage our members to charge service fees because it’s how you act like a successful business owner. If you want to learn about a travel agent training program that does more than teach you how to sell travel and actually teaches you how to start and run your own business selling travel, then definitely check out our Travel MBA program, www.getyourtravelmba.com.