July 18, 2017

Navigating Hidden Software Fees

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, and use or are evaluating reservation management software, it is important to understand how vastly different the fee structures work. In particular, to be cautious of the hidden fee structure that some reservation and booking software providers are taking advantage of at your expense.  

We often have customers that are approached by other software companies. Their message can be tempting; “go with us and we’ll give you the lowest credit card fees around!” Which is typically something around, or slightly under, ~2%. However, there is a large piece of this pricing puzzle that is being left out of, or extremely buried in, their sales pitch: there is an additional hidden 5-7% fee charged to your customers when they book online. Typically, information on this extra, hidden fee is not communicated, it is only brought up when you directly ask about it.

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.

With some providers the fees are hidden permanently. Meaning your customer is charged your ticket price + the software fees. When you look at that customer’s invoice in the back office view in your system, you don’t see the extra “software fee” they paid online. Here is a visual representation of how the discrepancy plays out between what your customers see and pay online, and what is shown to you, in your view of the invoice: This practice presents issues in more than one way:

1. You are discouraging online bookings: The ultimate goal is to get more people booking online and less calling in. That means less overhead for you, more time and efficiencies. However, when customers know they can get a 5-7% discount by calling, then they typically go that route! On larger ticket items, like a $200 tour, this can be an unexpected $12 fee at checkout. A family of 4 going to an adventure park is something around  $14 in fees. This is not including sales tax or other fees you have to charge. These are significant percentage fees that affect not only to your bottom line but also discourage your customers’ online purchase (and possibly their purchase, period.)
   
2. Deception as the base of your relationship:  The idea that the invoice details you see for a customer are completely different than what they actually were charged (and what they are likely seeing) is not only confusing but appears to be deceiving. Ideally, you, as the owner or operator, always have access to all financial details.
   
3. With a percentage based fee system, the more your customer books the more they are penalized: Further, when you periodically increase your price (over time due to inflation, changes in the market, etc.) the percentage based fees affect the total price even more and your ideal price point is lost.
   
4. Your software provider controls your customer pricing instead of you: Establishing a winning price point, as many of you are well aware of, can be extremely difficult. There are professionals who dedicate entire careers studying human reaction and behavior to even fractional changes in pricing. Positioning yourself vs. the competition in your market (down to the dollar and cent), and even small things like the use of number 9s, 4s (i.e. $34.99) can be the difference between people buying and walking away. When someone adds an unknown fee, control over your business's pricing strategy is lost which directly affects your online booking conversion rate.

Here at The Flybook, we feel transparency is critical to all of our professional relationships. We are motivated to be partners in business so that we can simultaneously build each other up and create win-win relationships. We both have long-term goals for our businesses, so why not act as allies and partners?

In The Flybook, you can see within every reservation what the base cost is and what the fees charged were. It is your decision and always in your control whether the fees (which are a nominal, flat rate and not percentage based) are passed along to the customer, absorbed into the base cost, or not passed along and paid separately by your business. Beyond that, at any time, you can generate detailed reports breaking down every single fee charged. The line items in revenue and transaction reports are broken out by base cost and fees.

There are others like us in the software world that share this same philosophy. But, it can be hard to decipher when you are evaluating software providers. If you are exploring software options, or if you are being “pitched” to, here are a few key questions to find out if a provider is charging the end customer and hiding it from you:

1. Ask your provider what fees you are paying and what fees your customers are paying.
2. If there is any chance your provider is charging your customers a fee, it is worth your time to make an online reservation with your company and compare the the taxes/fees that show up in your back office view for that transaction. It will likely be immediately obvious comparing the two totals.

Deliberately keeping you in the dark from the methods and amounts being collected from your clientele comes across as dishonest. It is important to be aware of all fees charged by your software providers and to find the right solution for your business with all the information in front of you.

Here at The Flybook we take pride in what we do and we are always an open book; we’d be happy to sit down with you to take a look at what might be the best solution for you and your business. Schedule a no-obligations demo with an expert from our team today:The Flybook is the most advanced activity and tour operator booking software for companies that offer any combination of tours, rentals, activities and lodging. Manage all your needs in one place with online reservations, digital waivers, guide assignment, marketing automation and more.Tour by IndustrySCHEDULE A FREE DEMORead Next: Study Reveals How Many Tourists Book Online for Activities