
The great commission debate – do higher commissions guarantee more income?
If you’re considering setting up your own travel business, chances are you have already spent some time researching the travel franchises available. In doing so, you’ll have picked up on the commission splits available with each franchise, and how much they vary with some businesses paying 100% of the commission you make on sales.
But is this a deal that’s too good to be true? While it might be tempting to focus on the earnings, it’s worth digging a little deeper to see whether a more favourable commission split for you, the business owner, equates to a compromise in the quality and volume of support you receive. After all, setting up and running a business is no mean feat, and even the most seasoned travel professional needs a helping hand now and again. Here are some key factors you should research and compare when deciding if a higher commission split is truly worth it.
Are you in control of your margin?
While the promise of 100% commission will grab your attention, you need to look into whether you have control over your margins – and if you don’t, what levels are the margins set at? The smaller the margin, the more bookings you’ll have to make to see significant earnings, even if you’re retaining the full amount of commission.
Do you have to chase targets?
Some businesses require you to hit certain sales thresholds before you see any of the commission you make – which again loops back to the question of ‘how many bookings will you have to make to see notable earning potential?’ The next question you need to ask is ‘How easy does this business make it to achieve these sales targets?’, and ‘Are the targets achievable?’. If there’s a lack of product inventory or wraparound support, hitting targets might be difficult.
Where will your customers come from?
When you start a business, it takes time to build up a loyal customer base – and even if you’re already selling travel, there’s no guarantee that your existing customers will follow you. It’s worth checking whether the franchise you’re considering helps you to find customers while you establish yourself - whether it’s providing leads, supporting you with your marketing, or allowing you to collaborate with other business owners.
Are you and your customers protected?
It is very important to check whether the business offers financial protection. If something goes wrong, is your customers’ money, and your commission, safe? With no measures in place, your finances (and your reputation) could be at serious risk. In the world of travel, things don’t always go to plan – from suppliers going bust, to natural disasters, and pandemics. A lack of financial protection can be a costly price to pay.
Look for hidden charges
Many businesses pass on merchant card charges, transaction fees, insurance charges, and equipment rental, to name a few. All these eat into your earnings.
Is your ongoing development prioritised?
Travel is an ever-changing industry, and to stay ahead of the competition, you need to have a growth mindset and be committed to learning and development. What role do the travel franchises that you're considering, play? Do they prioritise your development?
Are there familiarisation trips to experience products and destinations first-hand? Are you invited to supplier-led training sessions? Are there on-demand training courses available? You need to question whether the extra money in your pocket is worth the absence of learning opportunities, and how you will grow your business without this.
Will you receive coaching and mentoring?
Personal, one-to-one support is key when setting up and growing a business, particularly when you’re operating on your own. Sometimes, learning from someone who’s ‘been there and done it’, or having someone at the end of the phone to act as a sounding board and to help you overcome the barriers you’re facing, can make such a huge difference to both your performance and your mindset. If you’re struggling to get to grips with things, or you’re not feeling great about yourself or your business, the chances are your sales will show it. Unless you’re a seasoned business owner who’s used to the ups and downs of entrepreneurship (especially in the travel industry), we’d highly recommend sacrificing that extra commission in order to receive dedicated support whenever you need it.
Making the right choice
In today’s economic climate, it can be easy to chase higher pay cheques and opt for a travel franchise which allows you to keep every penny of the commission you make. And for some people, that option works well. However, for others, particularly those who have never owned a business before, the benefits of having wider support and protection in exchange for a portion of the commission far outweigh those extra Rands in the bank at the end of the month.
We would also like to encourage you to do your research and understand what each company offers you. The Travel Counsellors Discovery Events will give you a taste of life as a Travel Counsellor, in a no-pressure, no-hard-sell environment.
We already have several events in the diary for early 2025, so secure your spot today to see how we compare.