July 18, 2017
Reservation Management Software Fees: What Operators Need to Know
Not all software fees are as transparent as they appear. Here’s what tour, rental, and activity operators should know about the fees their reservation software provider may charge, and how those fees can affect both customers and online bookings.
Find out if your reservation software provider (or one that is pitching you) is open about the fees they charge your customers
If you own or operate a tour, rental, zip line, adventure park, or other activity-based business, choosing the right reservation management software involves much more than comparing monthly subscription prices or credit card processing rates.
One important factor that can be easy to overlook is how your software provider handles fees—and, more specifically, what fees may be charged to your customers during the online checkout process.
Some providers may promote low processing rates while also charging customers additional booking or service fees. Depending on how those fees are structured and disclosed, they can affect your pricing strategy, your customers’ experience, and potentially your online conversion rates.
That doesn’t necessarily mean one fee structure is right for every operator. The important thing is knowing exactly what you, and your customers, are being charged before choosing a reservation management software provider.
Low Processing Fees Don’t Always Tell the Whole Story
Operators evaluating reservations software will often compare providers based on the advertised credit card processing rate. A provider may promote a processing rate of around 2%, for example, which can initially appear to be the lowest-cost option.
But processing rates alone don’t always tell the full story.
Some software providers may also charge an additional percentage-based booking, service, or platform fee directly to the customer when they make an online reservation. In some cases, operators may not immediately see those charges reflected in the same way within their back-office reservation records.
Before comparing providers, it’s important to understand the complete fee structure—including what your business pays, what your customer pays, and exactly how those charges appear during checkout.
Not only is this fee often not communicated proactively, it is hidden out of sight to you (the owner, operator and/or admin) in your back office view.
In some cases, the information shown to the operator in the back office may not provide the same complete picture of fees that the customer sees during checkout.
For example, a customer may see the base ticket price plus an additional booking or service fee, while the reservation record available to the operator may primarily display the base transaction amount and selected processing information.
That difference can make it more difficult for operators to understand the complete customer experience and evaluate how additional fees may affect their business.
How Additional Booking Fees Can Affect Your Business
1. Additional Fees Can Discourage Online Bookings
One of the biggest benefits of online reservation booking software is giving customers the ability to book without needing to call your business. More online bookings can mean fewer manual transactions, less administrative work, and a more convenient experience for customers, but unexpected fees at checkout can create friction.
Consider a $200 tour with an additional 5–7% booking fee. That could add $10–$14 to the customer’s total. For a family booking multiple tickets or experiences, those fees can add up quickly.
If customers discover that they can avoid certain fees by calling instead of booking online, your business may end up encouraging the exact behavior your online booking system was meant to reduce.
The lesson isn’t necessarily that operators should never pass fees along to customers. Instead, it’s important to understand how those fees are presented and whether they support—or work against—your online booking strategy.
2. You Should Have Visibility Into What Customers Are Paying
Operators should have a clear understanding of the full financial picture associated with every reservation.
If customers are being charged additional booking, service, or software-related fees, that information should be easy for the business to access and understand.
Transparency matters because operators are ultimately responsible for the customer experience. When a guest has a question about what they were charged, your team should be able to clearly explain the transaction.
3. Percentage-Based Fees Can Increase as Your Prices Increase
Percentage-based fees can also become more significant as your prices change.
As operators adjust pricing because of inflation, demand, rising operating costs, or changes in the market, a percentage-based fee increases along with the ticket price.
For example, a 5% fee on a $50 activity adds $2.50. The same fee on a $250 booking adds $12.50.
That doesn’t automatically make percentage-based pricing the wrong choice, but operators should understand how their fee structure scales as their business grows and prices change.
4. Additional Fees Can Affect Your Pricing Strategy
Setting the right price for a tour, activity, rental, or attraction is rarely as simple as picking a number.
Operators carefully consider their costs, competitors, market demand, and the customer experience when determining their prices. Even relatively small changes can influence how customers perceive value and whether they decide to complete a booking.
When an additional fee is added during checkout, the final price your customer sees may be different from the price you intentionally set.
That’s why it’s important to understand how your activity and tour software handles customer-facing fees. You should know what customers will see before checkout and have confidence that the final price supports your overall pricing strategy.
Questions to Ask When Comparing Software Providers
Before choosing a new reservation management software provider, make sure you understand the complete fee structure. Ask questions like:
- What fees does my business pay?
- What fees, if any, are charged directly to my customers?
- Are customer fees flat-rate or percentage-based?
- Where are those fees disclosed during the online checkout process?
- Can I see every fee associated with a reservation in my back office?
- Can I choose whether to absorb fees or pass them along to customers?
- How will fees appear on customer receipts and invoices?
- Can I generate reports showing all transaction and fee details?
- Will the fee structure change based on the type or value of the booking?
- Can I complete a test booking to see exactly what my customers experience?
One of the simplest ways to evaluate a software provider is to complete a test booking yourself. Compare exactly what the customer sees and pays during checkout with the information available to you in the back office.
A provider should be able to clearly explain any differences.
What Fee Transparency Looks Like
Fee structures vary between software providers, but regardless of which system you choose, transparency should be part of the conversation.
With Flybook, operators can see the financial details associated with reservations, including the base cost and applicable fees. Operators maintain control over how certain fees are handled, including whether they are absorbed into the cost of doing business or passed along to the customer.
Detailed reporting also makes it easier to review transaction and revenue information, with line items separated to provide greater visibility into the components of each transaction.
The goal is simple: operators should understand what they are being charged, what their customers are being charged, and how those fees affect the overall booking experience.
Choose Reservation Software With the Full Picture
Choosing reservation management software is about more than comparing monthly pricing or advertised processing rates. Before making a decision, take the time to understand every fee involved, both the fees your business pays and the fees your customers may encounter during checkout.
Transparency gives you greater control over your pricing, helps you better understand the customer experience, and allows you to make more informed decisions about the technology supporting your business.
If you’re evaluating tour operator booking software and want a clearer picture of how Flybook handles reservations, payments, fees, and reporting, request a demo with the Flybook team.