By Jason Dwyer, chief executive of Bookable Holidays
Agents must address their true net costs if they want to stay in business.
The simple fact of the matter is more and more elements are involved in the true net cost of a holiday that are simply not getting identified.
Lower rates, increased advertising costs, non-commissionables and a string of additional liabilities, like Flight-Plus, all need to be continually monitored and factored in to your true net cost.
Then, only after these have been correctly calculated, can you apply your margin.
It was simple years ago when you took one price, discounted it down and then applied your margin, but in today’s world the pricing structure is completely different.
The ever-increasing number of additional items that all contribute to the net cost of the holiday, if forgotten, will continue to drive the market down and result, quite simply, in a lower gross profit per head that can’t be sustained.
We need to make money to stay in business and customers are only prepared to accept a certain degree of additional items.
If we are setting the benchmark lower than we can afford at the start of the sale because our mentality and systems have not identified all these additional changing costs we are making our lives far harder than they were ten years ago.
Then, we all had a point that we set that we were not prepared to go below to make sure all costs and profit expectations were met.
So why now do we allow all these additional costs to creep in increasing our true net cost, lowering our margins and trashing our gross profit per head?
If we all address our true pricing, and levels were raised to reflect and sustain all our true costs, it would make our lives as well as those of our customers a lot happier.