A percentage-fee booking platform can be an attractive option for service vendors, as it allows them to only pay for the bookings they receive. However, it's essential to understand the true annual cost of using such a platform, including both subscription fees and per-payment processing fees. In this post, we'll walk through the steps to calculate your actual annual cost using a booking tool's published rates as an example.
Key takeaways
- Calculate your estimated annual booking volume and revenue
- Determine the subscription tier you'll fall under based on your booking volume
- Factor in the per-payment processing fee for card transactions
- Add up all the fees to get your true annual cost
- Regularly review and adjust your calculations as your business grows and pricing changes
To illustrate this, let's consider a popular booking platform, HoneyBook, which charges a 20% booking fee on payments processed through their system, plus a 3% + $0.30 per transaction fee for card payments. Their subscription tiers start at $9/month for the "Starter" plan, with higher tiers offering additional features and support. Please note that pricing is subject to change, and it's crucial to confirm the current rates on the HoneyBook website.
Calculating your estimated annual booking volume and revenue
As a service vendor, you likely have a good idea of your average booking value and the number of bookings you receive per year. Let's assume you're a wedding photographer with an average booking value of $2,500 and you receive 20 bookings per year, resulting in an estimated annual revenue of $50,000. To calculate your estimated annual booking volume, simply multiply the number of bookings by the average booking value.
Determining your subscription tier and fees
Based on your estimated annual booking volume, determine which subscription tier you'll fall under. For example, if you're on the "Starter" plan, your monthly subscription fee would be $9. However, as your booking volume increases, you may need to upgrade to a higher tier, which could impact your annual costs. Be sure to review the pricing page and terms of service for the most up-to-date information.
Factoring in per-payment processing fees
In addition to the subscription fee, you'll also need to consider the per-payment processing fee for card transactions. Using the example of a 3% + $0.30 per transaction fee, if you receive a $2,500 booking, the processing fee would be $75 + $0.30 = $75.30. Multiply this by the number of bookings you receive per year to get your total processing fees.
Calculating your true annual cost
To get your true annual cost, add up your subscription fees, processing fees, and any other costs associated with using the platform. In this example, if you're on the "Starter" plan and receive 20 bookings per year, your annual subscription fee would be $9/month * 12 months = $108. Your total processing fees would be $75.30 * 20 bookings = $1,506. Your true annual cost would be $108 + $1,506 = $1,614.
FAQ
What if I have a high-volume business with many small bookings? You may want to consider a platform with a lower per-transaction fee or a tiered pricing structure to minimize your costs. How do I account for changes in pricing or fees? Regularly review the pricing page and terms of service for any updates, and adjust your calculations accordingly to ensure you're getting an accurate picture of your true annual cost. Are there any other costs I should consider when using a booking platform? Be sure to factor in any additional costs, such as payment processing fees for other payment methods or any add-on features you may need.
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