Working with resellers: how to build margin and add value to your products

“When you build your products, you want to build an extra 25% margin into your products. This margin will open the doors for you to work with any resellers and agents without the need to worry about your bottom line. This was the best advice I ever received while starting out my business” Josh Oakes, the Sunshine Tribe.

One of the main reasons that tour operators are hesitant to work with resellers is the commission. Paying 20-25% in commission per booking could be a deal-breaker to some business models.

However, rather than avoiding resellers and agents, why not consider reinventing your products to include that 25% margin.

What do we mean when we say build margin?

Think about the last time you paid for an Airbnb. Did you know? A hairdryer adds around $10 per night, a hot tub is worth around $26 extra per night, Wi-Fi brings in an additional $8 and cable can earn an extra $16 per night. This is according to data provided by Airbnb – as advice to hosts when the platform was growing. At an average occupancy rate of 75%, those amenities bring approximately $16,425 in additional annual revenue.

Of course, we don’t mean just charge more. What we mean by creating margin is creating that added value that gives your products the justification to demand a higher price.

The good news – as shown above, the smallest of things (if valued by the customer) can create a big margin.

Why now is the perfect time

As travel starts to recover from the impacts of the pandemic, many businesses are taking this opportunity to reinvent themselves.

This includes resellers.

Plenty of online travel agents and resellers are taking this opportunity to re-evaluate their business, to differentiate themselves and to stand out. Many resellers are no longer playing the price war and are now more focused on selling unique experiences to their customers. Meaning now more than ever, resellers value unique experiences that they can resell to their customers.

How to create margin

1) Observe your guests

What do your guests do while they are on your tours? Do they take a lot of photos? Or maybe they even ask someone to help take photos of them.

In that case, professional photography services may be highly valued by your guests. It also sounds extremely luxurious, so if included in your package, will give you the justification to charge quite a bit more for your tours and activities.

Do you notice your guests showing up in taxis or ubers? Try offering hotel or accommodation pickups.

2) Put yourself in the shoes of your guests

“I really wish I had a hot chocolate right now.” Have you ever heard your customers wish they had something while they were on one of your tours? Maybe the weather generally gets quite cold during your tour, a hot chocolate could be just what your guests are craving.

The costs of a hot chocolate would probably be in the region of 50 cents, but by adding it to your package, you could charge $5 to $10 more. Tapping into the growing chocolate market could significantly enhance the perceived value of your offerings.

Imagine you were a guest on one of your tours. What do you desire most right now? Make a list and identify the ones that you could practically provide.

3) Offer an upgrade of existing packages

If you want to know how to sell tour packages that build extra margin into your products, ask yourself what parts of your tour could be upgraded. If cars are used, you could use more luxurious cars to transport your guests. If you offer drinks, you could provide an upgrade to champagne.

Make a list of the parts of your tour that can be upgraded and see which ones are the most feasible in both the short term and long term.

4) Partner with other tour operators

Partnering with other tour operators may be the fastest way to add value to your package. For example, if you run a city walking tour, you could partner with a picnic operator to provide picnics in the city after your walking tour. This will immediately make your walking tour highly unique and give you the opportunity to charge for a luxurious city experience rather than just a city tour.

Check out all the tour operators around you and figure out which ones complement your tours and activities the best.

To finish

Remember, a sandwich is worth more to a hungry man than it is to a full one. The changes you make to your product, no matter how small, can be highly valued by your customers.

The added value and margin you build will make your products more unique, which will make more agents and resellers want to work with you. The margin you build also gives you the freedom to work with more resellers as your bottom line will be less affected.

Want to take your distribution strategy to greater heights?