Edgewood Travel, Savannah, Ga.
Business Profile: Storefront; staff: 3 fulltime, 2 part-time, 4 ICs; business mix: 85% leisure; years in business: since 1992; Ensemble
When did you first start charging fees and why?
Edgemon: When the commission caps came in 1995; it was basically airfare transactional fees to replace the commissions lost. At that point we were a small corporate agency, then we transitioned to leisure and we started adding service fees, initially for foreign independent trips. We do a lot of customization work, and there is an incredible amount of time and expertise involved.
For what services do you charge set fees?
Edgemon: We charge for air. For cruise bookings we have a minimum of $25 per traveler; for hotel bookings, a minimum of $15. We charge for domestic and international independent trip planning, based on the length of the trip – so 10 days or less is $250; 10 to 20 days is $300, etc.
What percentage of revenue comes from fees now?
Edgemon: About 20%. I would like to get it into the 30% to 50% range. I actually see a time a time when it’s maybe 100%, based on what suppliers are doing. By that point, if consumers really want a consultative process, they’ll be attuned to paying for a consultant’s time and expertise.
Do you ever waive your fees?
Edgemon: We do our utmost not to waive fees. A lot of our customers know each other in the local area, so if we started waiving fees for one person it would be, ‘Why are you waiving fees for them and not for me?’
We feel like we’re earning our fees through professional services. My accountant has never waived a fee for me. My real estate attorney has never waived a fee for me, and I don’t anticipate that they should, because they’ve spent a lot of time studying and learning. I don’t anticipate that our customers should expect that from us either.
Do you ever encounter objections to fees from new or existing clients?
Edgemon: With existing clients it seems easier. They seem to appreciate our service. In fact, some of them have said they’d been surprised that I didn’t have fees previously. For newer clients, it’s more of a training or indoctrination process. What we do is give them a little bit of value before introducing the fee. And we glean information from publications – scripts we can use to answer things like, ‘The other agencies don’t charge a fee.’
People who are asking for complex requests are coming to you because they’re already a little bit stuck. If they’re just asking for Caribbean, or air, something they feel they can easily book on their own, then it’s more of a conversation to justify the fee. Most of the time, yes [they end up booking], and that’s because of the customer advocacy part of the conversation – ‘If you book on Expedia, there is nobody on your team.’
What is, or has been, the most difficult thing for you in charging fees?
Edgemon: Overcoming our own anxieties about them; it’s a constant process.
When did you last raise your fees?
Edgemon: We raised our independent trip planning fees this year. We have not raised air ticket fees for a while, and I don’t anticipate we will raise them any time soon.
How has assessing service fees impacted your business?
Edgemon: It has made me much more attuned to the bottom line and how service fees can affect the bottom line, especially in the environment that we’re in. Agents are working extremely hard. Every time we’re able to charge a service fee, we can do the same amount of work and make more money; that’s a reward right there.
Does an agent's geographic location or market niche determine whether s/he will be able to assess fees?
Edgemon: Their market niche definitely determines the level of service fees and how high they can go. If you have a specialty that’s not met by many people, it’s a classic case of supply and demand. For transactional fees, like airline tickets, you’re definitely limited by the marketplace. So it depends on whether you’re talking about transactional fees or consultative processing fees.
With transactional fees, geography impacts it a little bit more. If everybody in your marketplace is charging $30 for an airline ticket, and you want to continue to sell airline tickets and you’re charging $50, you’re pricing yourself out of the market. You may make a choice and say, ‘I’m going to charge X amount because I don’t really care if I sell that anymore.’
What advice do you have for agents about introducing fees?
Edgemon: Get up every morning and say, ‘I’m a professional and I deserve to be compensated as a professional.’ Just give yourself a self-talk every day. In our industry the agents have held themselves back. First they need to evaluate what they’re making money on, what they’re losing money on, what the breakeven points are. They need metrics in order to decide how much to charge.