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Professional Fee Options for Today and Tomorrow

By HAR Sponsor

Published June 15, 2021

Montecito Village Travel

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a.k.a. The Value of You

By Connie Miller, VP of Business Development, Montecito Village Travel

Professional fees provide a number of benefits in addition to an additional revenue stream. It distinguishes the amateur from professional; it discourages time wasters and looky-loos and it provides assurance to the client that you are working for them.

If you are reading this paper, one can only assume you are interested in learning more about professional service fees. This paper will discuss the various fee options used by travel advisors. We will delve into discovering the “Value of You” and how to present your value to your clients with confidence.

The Pros and Cons of Professional Fees

Let’s evaluate the Pros and the Cons (aka FEARS) tied to professional fees. The Pros are that you establish yourself as a professional, you create a revenue stream that cannot be taken away and you create a sticky factor between you and your clients. The ultimate bonus is that clients who understand your value (by paying your fee) will refer others who value the use of a professional.

The Cons are all tied to fear… fear of losing business… fear of being embarrassed… fear of feeling inferior or undeserving. Tied to that fear are the “What ifs” … what if I lose my best client, what if my client doesn’t feel I’m worth the fee and what if my client is also a friend and they feel they have been insulted. The truth is that most of the things we worry about NEVER Happen!

Professional Fee Models

Throughout this article you will notice that I am taking Nolan Burris’s suggestion of calling service fees what they truly are – professional fees. I think you should, too, as it elevates your status in the minds of your clients.

Creating a professional fee model is an art and NEVER a one size fits all proposition. I’ve outlined some of the more common fee structures below to provide you with inspiration for creating your own fee schedule. I urge you to use them only as a guideline. I’ve also provided a fee range for each model based on what I’ve seen in the industry. What you charge is dependent upon a variety of factors that we will discuss later in this the paper.

Plan to Go Fees

Probably one of the most common Professional Fee is the Plan-to-Go Fee. In this situation:

Fees are collected up front
Fees cover the advisor’s consultation and research time
Fees may or may not be applied to final payment – while some advisors apply this fee to the client’s final payment, the majority do not and I highly recommend that you do not apply a Plan-to-Go fee to the final payment
The fee may be a fixed amount or on a sliding scale – some advisors charge a flat fee for a cruise or tour booking - regardless of complexity; others may charge on a sliding scale which could be based on a percentage of the trip cost, number of travelers traveling, number of days, etc.
Range: $50-500 and more – generally not applied to final payment – sometimes is based on length or complexity of trip

Booking Fees

Another common Professional Fee is a Booking Fee.

Booking fees are considered to be transactional in nature because they are tied to a specific action… a cruise booking, a hotel or air reservation, etc.
The fees are collected when a booking takes place
Generally, they are non-refundable and may be a fixed fee or based on a sliding scale
One advantage is that they are the easiest fees to publish on a website or in a letter of engagement. The disadvantage is that they are only charged when a client purchases a trip
Range: Cruises/Tours $35-500 – sometimes the fee is per person; Air $20 - $150/ticket | Hotel$15 - $150; FIT $100 - $500 – sometimes fee is per person or per day

Cancellation Fees

Although some advisors charged cancellation fees prior to 2020, there was a lot of buzz in the industry last year about cancellation fees due to COVID. Generally:

Cancellation Fees may be fixed amount or based on a sliding scale as a percentage of the sale
Cancellation Fees are more difficult to collect if monies are returned directly to the client’s credit card
Range: $50–100 – sometimes waived if there is an immediate rebooking – sometimes calculated as a percentage of trip or per person fee

Rebooking Fees

These fees are charged if/when a client changes the entire trip from one destination to another. For example, you plan a trip for the client to India and then after the research is completed and initial booking has been completed, the client says that he wants to go to Patagonia instead.

Some advisors will charge a new Plan-To-Go fee, or a lesser fee for rebooking
Many times the fee is a fixed amount that is generally less than the planning fee. Some advisors may use a sliding scale
Range: $50 to $100 depending upon complexity of trip

Retainer Fee:

According to advisors, this is one of the most difficult fees to price correctly. If not priced appropriately, an advisor may provide more service for less compensation than by using other models. Also, in the client’s mind, a retainer model may mean 24/7 accesibility. Success is dependent upon the relationship between the advisor and the client. One of the best advice I’ve heard is to begin your retainer model with a 3-month trial period with an out clause for either party.

Customer pays an annual or monthly fee to cover all transactions regardless of utilization
Amount of retainer can be protected by assigning a specific number of hours to the retainer before other fees are assessed
Generally preferred by very high-end and high-frequency travelers or those that require a high level of service
Range: As low as $2500 annually, up to $50,000 -100,000 annually after a 90-day trial period

Hourly Rate

This model is less frequently used, however does have the benefit of being extremely accurate relevant to time and compensation.

Customer plays an hourly rate and time is tracked for billing
Advisor generally estimates the number of hours required and monies are is collected up front. If project takes more time, the advisor will consult with client how to proceed.
Generally preferred by very high-end and high-frequency travelers or for groups and incentives.

Determining Your Worth

Experience – Service Level – Clientele

So now that we have seen a few of the fee models used by advisors, let’s talk about how much to charge. What is the value of your worth? It really boils down to experience, service and your clientele.

First, let’s discuss experience. According to Bob Joslyn, there are four levels of advisor experience:

Agent: The agent is where almost everyone begins. The agent is generally newer to the industry, smart but still in the learning phase and bookings are more transactional than consultative.

Specialist: The natural progression is from agent to specialist. An example would be when an agent becomes excellent at romance destinations, honeymoons and destination weddings and his/her business grows in that area. Referrals and business come to this advisor based on her/his expertise.

Consultant: Over the course of time, the next progression is to that of consultant. The specialist’s clients are now looking for other adventures and the specialist becomes a consultant to the client. She/he knows their clients well and also has destination, product, experience expertise to truly consult with their client.

Advisor: The final stage is that of trusted advisor, generally working with long-term clients and their referrals. In this stage it’s not uncommon for the client to rely totally on the trusted advisor to make recommendations.

So, which category do you fall into? Does it make sense that the value of the trusted advisor may be greater than that of an agent? This is one of the aspects you should consider when determining the amount of your professional fee.

The next consideration is your service level. To give you a better idea of what I mean by level of service, let me share this story with you. We had a Disney specialist in our office. She not only made recommendations regarding length of stay, property, general tips, but she would map out a day-by-day itinerary for her travelers suggesting which parks on which days, which restaurants, the times to go to the parks for the shortest lines, the best way to navigate the parks and which attractions to head to first, she made their reservations for them and shared her considerable knowledge and tricks for getting the most of their stay. Others within the office, all extremely talented and excellent advisors, delivered excellent service, but took a more hands-off approach to the day-to-day recommendations and suggestions. Which advisor do you think charged a higher fee?

As you can see, advisors deliver different degrees of service. In the case above, there was no right or wrong. All of the advisors were knowledgeable and competent. When it comes to professional fees, however, your level of service is another aspect to be considered.

Third, who are your clients and what do you sell? When determining your fees, you must also factor in the products you sell, the difficulty of the products you sell (is everything you do custom or do you use wholesalers) and the market you are selling to. Some advisors work with high-net-worth individuals while others work with main-stream America. Knowing what you sell and to whom you sell is critical when determining your service fees.

Wow, that’s a lot to consider, right? To help you in this process, I recommend that you take inventory of everything you do for your clients when planning a trip. Write it down and add a column for the time spent. Then identify from the client’s perspective why what you do is valuable to the client so that you can articulate it. If you do this activity, you will better understand your value and it will help you determine your fees. Also, you will be able to understand from your client’s perspective why what you do is important to them.

Presenting your Value Proposition to the Client

When, Where, How

When and where to disclose your fees:

One of the biggest stumbling blocks when charging fees for the first time is when and where you should disclose your fees. I believe the best times and places are:

After Discovery – after you have engaged the client in communication, have learned their goals and developed a relationship. At that point you can explain how you work on their behalf
Before Discovery – some advisors like getting the fee scenario out of the way in the beginning and that works too – whatever is most comfortable for you

Other Considerations:

You may want to post your fees on your website – this allows people researching you to be aware that you are a fee-based consultant
In your Professional Fee Agreement - An explanation of fees and what the fees cover should be in writing and signed by the client after discovery

Creating Your Message:

Creating your message and practicing your delivery is imperative to being confident in stating your fee. Outlined below is the formula I use when determining how to deliver this important message:

Start with your passion, your why! Lead with what your job means to you
Explain your process – all you do – keeping your client’s needs and point of view in the forefront
Conclude with the outcome
State your fee

Everyone’s point of view will be different. You should keep the tone conversational and allow the client to respond to what you are saying. Shown below is an example of how to state your passion, your process, the expected outcome and your fee after a discovery session. Once you create your basic message, practice, practice and practice some more so that you feel comfortable and confident.

“Mary, this sounds like a wonderful vacation for your family and I already have some ideas brewing as to how to satisfy both that 5-year-old and 17-year-old so that everyone has a great time. You know, this is the part of the job I really love, keeping everybody engaged and taking the pressure off of you so you can relax, too.

Since this is the first time we are working together, I’d like to share with you a bit about me and how I work with my clients. I’ve been in the industry for 20+ years and I specialize in family vacations. I take pride in knowing my travelers personally and the benefit to you is that this information helps me create the perfect trip for you and your family to remember for years.

I then work with various suppliers that I have personally vetted to find you the best value for your money and I will make recommendations for you to choose from based on my experience.

Once we finalize your travel plans, I will monitor your flights, make dinner reservations, book theatre tickets, shore excursions, activities and oversee your vacation plans with an eye to detail.

And when you are on your way, I will be available to assist you with any unforeseen hiccups you might experience along the way such as flight delays or missed connections.

My plan to go fee is $xxx and I promise that once your suitcase is packed, all you have to do is relax and enjoy.

How does that sound to you? Are we ready to get started?”

Presenting Fees to Existing Clients

It’s your call… and I mean literally your call

Regardless if you plan to charge your existing clients or not, I feel it is important to make a personal call to your clients advising them of your fee schedule. It is the personal touch that clients crave, and the implementation of professional fees should never be a surprise.

Remember you have control and whether or not to charge fees of your existing clients is your decision. Here are some of your options:

Provide an effective date and tell them why you are implementing Professional Fees
Provide an effective date and one more “free pass” for their next trip
Grandfather them in but let them know that you are now charging fees

Additional Considerations

Documentation | Services

After you have advised your client of your professional fees, you should create a Scope of Work or Letter of Agreement outlining your fees and have the client sign this letter of agreement. At a minimum the Letter of Agreement should include:

The amount of the fee
Items included in the fee
How the fee will be collected
If the is refundable

Signatures may be obtained digitally and listed below are some of the services you may want to consider:

JotForm – Has a FREE version
DocuSign
Adobe

If you do not create a letter of agreement, at the very least you should place in writing everything you discussed verbally. Additionally, it is always good form to mention your fees on your website.

Collecting fees may be processed through your employer, your host agency or a via service of your choosing providing Seller of Travel law rules are followed. If you are collecting fees directly, consider private services such as:

Square
PayPal
Stripe

Seller of Travel Laws

Primarily: California | Florida | Washington | Hawaii

Data current at the time of this writing

If your clients reside in a state that has a Seller of Travel Law, it is imperative that you follow the rules of that state.

Generally speaking, in states with Seller of Travel laws, fees must be collected through whomever holds the Seller of Travel license. If you are employed by an agency, generally it is the agency that holds the license. If you are an Independent Contractor and your host agency holds the Seller of Travel license, visit with your host regarding procedures for collecting service fees.

If you hold your own Seller of Travel number—hosted or otherwise—there is no conflict with charging a service fee in any of the seller of travel states as long as the required processes are followed.

In Summary:

Today more than ever before, it’s important to know your value, to create a fee structure that is right for you based on your advisor style and your clientele. Then share your passion and watch your practice grow.