In my experience of working with travel consultants and being one for 9 years, charging ADEQUATE service fees is one of the most difficult things to do. I’ve been there, and completely understand the fear and difficulty. Your clients can easily go somewhere else and plan their travel for a lower fee or no fee. Because you could use the income, you are willing to overlook a planning fee because you will be making a commission. And a little bit of income is better than no income, right?
Wrong. One question I ask my clients who coach with me is: Have you ever done the math? In other words, have you ever figured out how much you are making per hour to earn that $150 in commission, because a little bit of income is better than no income? Most of the time, when you do the calculation, your per hour earnings are very disappointing and disheartening. Another way to put it – when you do the math, you realize it’s not worth your time.
Another piece of math you want to consider is your average revenue per booking. For example, if you generated a total of $30,000 in commissions and service fees in 2010 and you had a total of 200 bookings this year, your average revenue per booking would be $150.
Are you content with making $30,000 in revenue? Probably not. But can you realistically take on significantly more than 200 bookings? Also probably not. With 200 bookings for the year, I am guessing you are close to maximum capacity with your time. So what’s left to increase if you want to increase your revenue?
Answer: Your average revenue per booking
The $150 booking becomes worth your time when you can supplement it with $250 or more in service fees. Sounds great, right? But the person booking travel that generates a $150 commission is not likely to pay $250 more in service fees. That’s OK! This is exactly how I advise my clients to turn away business without insulting the client.
You need to set boundaries around what business you will work on and what business you won’t. The best way to set a boundary is to establish a minimum revenue per booking. When the client inquiry comes through, you can make an educated guess about the revenue the booking will generate and then make a decision. If you think it’s too low for you, you can tell them that you would love to help them, but will have to assess a minimum service fee of X dollars. Then give them an option to go elsewhere.
The other side of charging fees is embracing the value you provide. You need to be confident in yourself and what you can do for clients and they need to see that confidence. If you’re not confident that what you offer is unique and different from what others offer, it shows, and prospects and clients can tell. They will lose confidence in you and work with someone else.
The key is to know yourself, your unique gifts, and the value in what you offer. If those aren’t crystal clear to you, then your message isn’t clear to prospects. Take some quiet time to reflect on who you are and what benefits your clients receive. How are you different? If you’re having a hard time determining your unique gifts and value to the marketplace, talk to your best clients and ask them why they chose you. They’ll be happy to tell you.
You can’t be all things to everyone, and if you don’t go after the clients you want, you’ll end up with those you don’t want. That shakes your confidence, tires you, and dilutes your unique gifts and this lack of confidence pushes your ideal clients farther away.
When you doubt that clients will pay for your services, you won’t make the sale. You have to be clear on the value you provide and not be shy about letting others know. Stop trying to be of service to everybody and anybody that comes your way. It all comes back to picking your specialty and finding the people who need you the most what do they need?
Calculate your average revenue per booking. You need 2 simple numbers:
1) The total amount of commissions paid to you in 2010.
2) The number of bookings you processed in 2010.
Your formula is 1 divided by 2 from above.
Decide if this is an adequate number for you. Are you happy with this income? If you want more income in 2011, which number can you increase to get there? Can you handle more bookings? If you can’t handle more bookings, then you will need to increase your average revenue per booking. The simplest way to do this is to have a bottom limit. Decide on your bottom limit. Share your bottom limit with your clients. Tell them you have to charge a fee of X, if their booking falls below this limit. Tell them you love doing what you do, you want to stay in business, but you won’t be able to if you take on smaller bookings.