Booking economics
OTA commissions: calculate what a tour booking really leaves you
A booking notification shows revenue, not profit. Before adding a marketplace, calculate what remains after the costs of acquiring and delivering that particular booking.
The practical takeaway
Use your contracted commission and real delivery costs. Compare contribution per completed booking, then decide how much setup and ongoing work that contribution can support.
Separate four different kinds of cost
Marketplace commission, product review charges, agency setup fees and booking-software subscriptions are separate items. Paying an agency does not remove platform charges. Viator currently publishes a non-refundable US$29 review fee per experience; its commission depends on your arrangement. Do not budget with a percentage copied from another operator.
Ask for the relevant terms before approving a channel. Check how commission is calculated, when completed bookings are paid, what happens to refunds and whether software charges also apply to bookings from that channel.
Work through one transparent example
These numbers are illustrative and do not quote a marketplace’s commission. Suppose one participant pays US$60, your commission assumption is 25%, and the cost of serving that participant is US$20. The booking contributes US$25 before fixed overhead, software charges and tax.
- Contribution = retail revenue − commission − booking-specific costs.
- Break-even bookings = setup cost ÷ contribution, rounded up.
- A US$299 setup at US$25 contribution requires 12 additional completed bookings to recover that setup fee alone.
| Item | Illustrative amount |
|---|---|
| Retail revenue | US$60 |
| Commission assumption: 25% | −US$15 |
| Delivery cost | −US$20 |
| Contribution before remaining costs | US$25 |
Include the costs that change with group size
Per-person costs might include admissions, tastings or equipment rental. Per-departure costs might include a guide, vehicle or venue hire. A private tour with two guests can have very different economics from the same retail price spread across eight guests.
Model a realistic low-attendance departure as well as your normal group. Keep a separate allowance for fixed expenses and possible refunds. A positive contribution is useful, but it does not by itself prove that the business is profitable.
- Check minimum participants and the cost of running below your usual group size.
- Include payment, currency and channel-software charges when they apply.
- Review whether new OTA demand fills spare capacity or replaces direct demand.
Use the model to choose your launch scope
Start with products that leave room to pay for distribution and still deliver a good experience. If a product has little or no contribution, improving its price or operating costs may matter more than adding channels.
Our localized booking-cost guide includes an editable calculator. Use it for a first scenario, then validate the numbers against your actual contract and bookkeeping. Keep a monthly record of completed bookings, contribution and maintenance time to decide whether expanding distribution makes sense. Break-even is a planning calculation, never a prediction of bookings.
