Percent-of-revenue pricing means the software vendor takes a share of each booking or sale that passes through the system, instead of, or on top of, a fixed subscription. Your bill rises and falls with your takings, not with how many staff log in or what the software costs the vendor to run.
If you run tours or activities you may meet this model in booking systems, and in the reseller channels that send you customers. The same pricing can be fair in one place and expensive in the other.
Why it feels cheap at the start
In a first season, a share of a small number is a small number. There is nothing to pay up front and nothing to pay in a month when the boats stay tied up. That is a real benefit, and for a new operator it can be the right deal: the vendor only earns when you do.
The catch is what the fee is tied to. The work the software does to record one booking is much the same whether the ticket costs a little or a lot, and whether you sell a handful a week or fill every departure. The fee grows with both. It scales with your success, not with anything extra the vendor does for you.
What happens when you raise your prices
A flat fee ignores your price list. A share does not. Put a tour up by a tenth and the vendor's fee on that tour goes up by a tenth, although nothing about the software changed. The same applies when you add extras such as photo packages, private charters or gift vouchers. So it pays to know exactly what the share is calculated on. Read your agreement for:
- Whether the share is taken on everything the customer pays, including taxes and extras, or on the ticket price alone.
- Whether it applies to bookings you key in yourself, such as phone calls, walk-ups and repeat groups.
- Whether the fee comes back to you when you refund a customer or cancel a trip for weather.
- Whether card processing is charged separately on top.
- Whether the fee can be shown to the customer as a booking fee, and what that does to the price they see at checkout.
Turning the share into a yearly figure
Take the revenue that went through the system last year and multiply it by the share in your agreement. Suppose 300,000 dollars of bookings went through and the agreement says 3 percent: that is 9,000 dollars a year, and 27,000 over three years if nothing grows. Those figures are invented purely to show the sum, so replace them with your own.
Then add any flat monthly platform fee. If you would rather not do it by hand, divide last year's fees by the number of tickets sold to get a fee per ticket, and put that into our free calculator for software bills. It shows the yearly and three-year totals from your own numbers.
When a share of revenue is fair
It is fair when the vendor brings you customers you would not have found, as a marketplace or reseller does. There the vendor is the network, and the share is the price of being on it. It is also reasonable when you are small, seasonal or testing a new product, because paying nothing in a dead month is worth something.
It is harder to justify when every booking comes from your own website and your own marketing, and the software is only recording the sale. In that case, set the yearly figure beside what a flat-priced system would cost, rented or owned. Our guide to renting versus owning business software walks through that decision, including when staying put is the better answer.
We build custom booking software for one flat monthly price, and we do not try to replace marketplaces or card processing. Our page for tour and activity operators sets out which parts can be rebuilt and which are better left rented.