Direct bookings: what platform commission actually costs you in a season

If you run tours or transfers, or rent out an apartment, you know the platforms take a percentage. But hardly anyone knows what that came to in euros last season. So we're going to work that sum out properly here. And then the other one, which people talk about far less: what it actually costs to have a channel of your own. By the end you'll have a number you can hold any quote up against, ours included.

The sum nobody ever works out

When we ask owners of tours, transfers or apartments how much the commission takes out of their season, the answer is nearly always the same. “Oh, they take their cut.” Sure they do. But how much? Nobody knows.

And it's not that people aren't paying attention. That's just how the business is set up. Nobody sends you a bill for commission in January. It quietly comes off each booking separately, in an amount that looks perfectly bearable on that one booking. Thirty euros on a hundred and thirty euro tour doesn't hurt. Thirty euros times five hundred bookings is something else entirely, but that number never pops up on any screen by itself.

Let's be clear, this isn't a post about how expensive the platforms are. They do a job you don't. They bring you a guest who's never heard of you, in a language you don't speak, two months before that guest gets on a plane. That has a price, and it's a fair one. You just need to see it in black and white once, because only then can you actually decide anything.

So we'll take one example and work it all the way through. We made the numbers up. They're only there to show the order in which you do the sums. You'll put in your own.

The example, worked all the way through

Say you run boat tours out of Trogir. Over the season, from May to October, you take 500 bookings, and the average booking is 140 euros. That's 70,000 euros of revenue for the season.

Now the commission. We can't give you the exact percentage as a fact, because it depends on the contract, the product category and the channel the booking comes through. With the big tour and activity platforms, the range you'll most often see quoted publicly is roughly twenty to thirty per cent. Let's take the middle, 25 per cent, just to keep the sum easy to follow.

25 per cent of 70,000 euros is 17,500 euros.

That's money you earned over the season, sailed, fed, insured and brought back to port, and never saw. Nobody stole it. You paid for a service. But it's still 17,500 euros.

Now do the same sum with your own numbers. It takes under five minutes. Start with the number of bookings that came through the platforms last season. Then work out the average booking value, by dividing your total platform revenue by the number of bookings. Multiply those two together and you have the revenue. Finally, multiply the revenue by the percentage in your own contract, not ours.

No tidy annual report? Never mind, don't let that stop you. Take the August statement, which you've got in front of you anyway, multiply it by the number of months you ran at full capacity and add a rough estimate for the shoulder months. A ballpark number is infinitely more useful than none at all.

The number you end up with is the only really important figure in this whole post. Everything else is just a conversation about what to do with it.

What changes when some bookings go direct

This is where expectations usually get inflated, so let's come at it from the other end and assume the platforms stay.

Say you move 30 per cent of your bookings onto your own site. That's 150 of our 500 bookings, or 21,000 euros of revenue. On that share, you save 5,250 euros in commission.

Why 30 per cent and not 80? Because guests who've never heard of you will still come through a platform, and that's fine. Three kinds of guest come to you direct. The one who comes back, the one a friend recommended you to, and the one who saw you on a platform, closed it and typed your name into Google. That third kind is the most common, and the quietest. We covered why that guest must also be able to find you outside social media in a website or just Instagram.

This whole sum only works on one condition. Booking on your site has to take as few steps as booking on the platform. If a guest has to send an enquiry and wait until tomorrow for a reply, they'll go back to the platform, and you'll pay commission on a guest you already had. We set out what a booking system needs to know to cope with that in booking system for tours and transfers.

A direct channel has a bill of its own

This is where most posts about commission stop, which makes it look as if the 5,250 euros is pure profit. Sadly, it isn't. A direct booking has its own costs. They're just spread out differently.

Card payments. The payment provider takes a percentage of every transaction, and how much depends on your contract and on the card the guest pays with. It's mostly somewhere around 1.5 to 3 per cent. On 21,000 euros, that's roughly between three hundred and six hundred euros.

Hosting, domain and maintenance. The site has to live somewhere, and somebody has to look at it every now and then. We're deliberately not putting a figure on this, because it depends on how much the system does. But it's the smallest item on this list, and the only one that doesn't grow with the number of bookings.

Your time. Everyone skips this one, and it's often the biggest. Say you spend eight minutes on each direct booking, on a confirmation, a change of date or an answer to a question about parking. Times 150 bookings, that's 20 hours over the season. Only you know what that really costs you, because an hour of yours in August isn't worth the same as one in May. And it's easy to get this wrong in both directions. If the booking is well put together and the guest sees everything before typing in their name, those eight minutes drop to two. If the site is just an enquiry form, it climbs to twenty and the back and forth eats up the saving.

Advertising, if you do any. We can't estimate this one for you, because it depends on whether you advertise at all.

Add up your own items and take them off the saving. Whatever's left is what actually stays in your pocket, and that's from moving just a third of your bookings. If it looks small, multiply it by the number of seasons you're planning to keep going.

The difference the percentage doesn't show

There's one thing in this calculation that's worth more than the amount itself, and it's the easiest one to miss.

Commission is a percentage. It grows with every booking, and it'll keep growing for as long as your business does. Do twice as much next season and the commission doubles too. And so on, every year.

Your own channel works differently, because its costs mostly aren't a percentage. Hosting costs the same at 200 bookings as at 2,000. Card fees are a percentage, but a far smaller one. Your time grows too, though more slowly than revenue, because a well set up booking answers on its own the questions you'd otherwise answer by hand. That's why this calculation tips further your way year after year. The first season carries the cost of building it. The second one doesn't.

Then there's something that doesn't show up in the calculation at all, and that's the guest's details. A booking through a middleman leaves you a name and a date, rarely much else. A direct booking leaves you the contact details of a guest who's already paid you once. And that's the cheapest guest you'll have next season.

We're deliberately not putting a build price here, because it depends on what the site has to do, and the gap between a catalogue with an enquiry form and a full booking system with payments is a big one. We've described the scope of the work on the web development page. But you now have a number to compare every quote with. Divide the amount of the quote by the annual saving you worked out, and you get the number of seasons it takes for the investment to come back. If that number looks reasonable to you, it's worth a conversation. If it doesn't, don't do it. That's a perfectly legitimate conclusion to draw from this calculation.

If you're going to take card payments, be ready for some paperwork too. We listed all of it in what you need for an online shop in Croatia. In Croatia that means fiscalisation, which is the tax authority's real-time reporting of receipts, plus working out how VAT applies to what you sell, and terms of sale published on the site before the first card payment goes through.

What a direct channel looks like in practice

To finish, a few examples from our own projects. They don't prove that moving away from the platforms gets you one particular number, but they do show how much a direct booking varies from one business to the next.

With Navy Blue and Blue Cave Tours, two brands share the same fleet, the same calendar and a single admin panel. The guest pays a 15 per cent deposit by card and the balance on the day of departure. The client reports that bookings are up 500 per cent on the previous season.

With Private Experience Croatia, an enquiry doesn't vanish into thin air. It goes through a concierge desk that asks what a person would ask, so the guest gets priced offers straight away and chooses between a 15 per cent deposit and paying the full amount. The client reports 20 per cent more bookings.

With Trogir Tours, the agency had until then sold from the waterfront. Within a few weeks, the site made it onto the first page of Google for the key searches, which opened up a channel that simply hadn't existed before. A 25 per cent deposit is charged before arrival.

With SeaExplore, each of the three products runs on its own logic. The group tour is booked online straight away, with a card deposit and the balance paid on board. The private charter and the taxi boat transfer are priced by route from the start.

And one example going the other way. With Dubrovnik4U Transfers there's no card and no user account. The booking stayed a five-step form that ends in a tidy email, because a private drive across the border is something you arrange, not something you take off a shelf. Payment upfront isn't a requirement for a direct channel. All that matters is that the booking doesn't go through a middleman.

If you'd like someone from our team to go through the sum with you, send your numbers to info@strigy.com. All we need is your number of bookings, the average value and the percentage from your contract. We'll send back the calculation and an honest opinion on whether it makes sense. Sometimes the answer is that it doesn't, and we'll tell you that too.