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

Every owner of a tour, a transfer service or an apartment knows the platforms take a percentage. Far fewer know what that came to last season in euros. In this post we run that sum all the way through, and then a second one that gets mentioned much less often: what it costs to have a channel of your own. At the end you are left with a number you can hold any quote up against.

The sum nobody has done

When we ask owners of tours, transfers or apartments what commission takes off them over a season, the answer is almost always the same: “They take their cut.” Everybody knows they take it. Nobody knows how much.

That is not ignorance, it is how the work is laid out. Commission does not arrive as a bill in January, it comes off every single booking, in an amount that on that one booking looks bearable. Thirty euros on a hundred and thirty euro tour does not hurt. Thirty euros times five hundred bookings is something else entirely, but that number never appears by itself on any screen.

The point of this post is not that platforms are expensive. Platforms do a job you do not do: they bring you a guest who has never heard of you, in a language you do not speak, two months before that guest boards a plane. That has a price and the price is fair. The point is that the price deserves to be seen written down once, because only then can you decide anything about it.

So we will set up one example and work it to the end. The figures in the example are ours and invented, they are here only to show the order of the calculation. You will fill in your own.

The example, worked to the end

Say you run boat tours out of Trogir. Say that over a season from May to October you take 500 bookings and the average booking is 140 euros. That is 70,000 euros of revenue across the season.

Now the commission. We cannot state the exact percentage as fact, because it depends on the contract, on the product category and on the channel the booking arrives through. With the big tour and activity platforms, the range quoted publicly most often is roughly twenty to thirty per cent. Let us take the middle, 25 per cent, purely to keep the sum readable.

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

That is the amount you earned over the season, sailed, fed, insured and brought back to port, and never saw. It was not stolen, it was paid for a service. But it is 17,500 euros.

Now run the same sum on your own numbers. It takes under five minutes. First, the number of bookings that came through the platforms last season. Second, the average booking value, which is your total platform revenue divided by the number of bookings. Third, multiply the two and you have the revenue. Fourth, multiply the revenue by the percentage in your own contract, not by ours.

If you do not have a tidy annual report, do not give up on the sum. Take the August statement, the month you have 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. An approximate number is infinitely more useful than none at all.

The number you end up with is the only genuinely important piece of information in this post. Everything else is a discussion about what to do with it.

What changes when part of the bookings goes direct

This is where expectations usually inflate, so let us start from the other end and assume the platforms stay.

Say you move 30 per cent of your bookings onto your own site. That is 150 bookings out of our 500, or 21,000 euros of revenue. The commission you did not pay on that share comes to 5,250 euros.

Why 30 per cent and not 80. Because a guest who has never heard of you still arrives through a platform, and that is fine. Three groups go direct: the guest who comes back, the guest who came on a friend's recommendation, and the guest who saw you on a platform, closed it and typed your name into Google. That third group is the largest and the quietest. Why that guest has to be able to find you outside social media as well we wrote about in a website or just Instagram.

One condition goes with this whole calculation. Booking on your site has to take as few steps as booking on the platform. If the guest has to send an enquiry and wait until tomorrow for an answer, they will go back there, and you will pay a commission on a guest you already had. What a booking system has to know in order to hold that up we set out 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 leaves the impression that 5,250 euros is pure profit. It is not. A direct booking has costs of its own, they are only spread differently.

Card payments. The payment provider takes a percentage per transaction, and how much depends on the contract and on the kind of card the guest pays with. The range mostly runs from about 1.5 to 3 per cent. On 21,000 euros that is roughly between three hundred and six hundred euros.

Hosting, domain and maintenance. The site has to sit somewhere and somebody has to look at it now and then. We deliberately do not put a figure here, because it depends on how much the system does, but it is the smallest item on this list and the only one that does not grow with the number of bookings.

Your time. The item everybody skips, and often the largest one. Say eight minutes per direct booking for a confirmation, a change of date or an answer to a question about parking. Times 150 bookings that is 20 hours over the season. What that really costs you is something only you know, because your hour in August is not worth the same as your hour in May. It is easy to get this wrong in both directions: if the booking is well put together and the guest sees everything before typing in a name, those eight minutes drop to two. If the site is only an enquiry form, it climbs to twenty and the saving gets eaten up in the back and forth.

Advertising, if you do any. This is the one item we cannot estimate for you, because it depends on whether you advertise at all.

Add up your own items and subtract them from the saving. What is left is the amount that genuinely stays with you, and that is from moving only a third of the bookings. If it looks small to you, multiply it by the number of seasons you plan to keep working.

The difference the percentage does not show

One thing in this calculation is worth more than the amount itself, and it is the easiest one to miss.

Commission is a percentage. It grows with every booking and it will keep growing for as long as the business grows. If you do twice as much next season, the commission is twice as large, and so on every year.

The costs of your own channel are mostly not a percentage. Hosting costs the same at 200 bookings and at 2,000. Card payments are a percentage, but a far smaller one. Your time grows too, though more slowly than revenue, because a well set up booking answers by itself the questions you would otherwise answer by hand. That is why this calculation shifts in your favour year by year. The first season carries the cost of building it, the second does not.

The same goes for the thing that does not appear in the calculation at all: the guest details. A booking that comes through a middleman leaves you a name and a date, rarely much more. A booking that comes direct leaves you the contact details of a guest who has already paid you once, and that is the cheapest guest you will have next season.

We deliberately do not put a build price here, because it depends on what the site has to do, and the difference between a catalogue with an enquiry form and a full booking system with payments is large. The scope of the work is described on the web development page. But you now have a number every quote gets compared against. 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, the conversation is worth having. If it does not, do not do it, and that is a perfectly legitimate conclusion to draw from this calculation.

If you take card payments, the decision brings paperwork with it, which we listed in what you need for an online shop in Croatia. In Croatia that means fiscalisation, the tax authority's real time reporting of receipts, plus how VAT applies to what you sell and terms of sale published on the site before the first card goes through.

What a direct channel looks like in practice

A few examples from our own projects. They are not here as proof that moving away from the platforms produces one particular number, but to show how much a direct booking differs 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, and the guest pays a 15 per cent deposit by card with 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 does not disappear into thin air but 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 the full amount. The client reports 20 per cent more bookings.

With Trogir Tours, the agency had until then sold from the waterfront, and within a few weeks the site reached the first page of Google for the key searches, opening a channel that had not existed before. A 25 per cent deposit is charged before arrival.

With SeaExplore, three products run on three different logics: the group tour is booked online straight away with a card deposit and the balance on board, while the private charter and the taxi boat transfer are priced by route from the start.

And one example in the other direction. With Dubrovnik4U Transfers there is 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 gets arranged, not taken off a shelf. A direct channel does not have to mean payment upfront, it has to mean the booking does not go through a middleman.

If you would like somebody from our team to go through your own sum with you, send the numbers to info@strigy.com: how many bookings, the average value and the percentage from your contract. We send back the calculation and an opinion on whether it makes sense or not. Sometimes the answer is that it does not, and we will write that too.