Stop paying commissions for software

December 1, 2010, Grant Jurgeneit

Customers sometimes ask why we charge a monthly fee rather than following the herd and taking a commission on bookings. At first glance, paying a small commission on a booking may be attractive, especially to small businesses. But Checkfront believes commissions should be paid for sales, not services. If you market the product and assist prospects through the decision process, then you are entitled. Does your booking software sell your service? If not, take a closer look; it’s a raw deal. Once bookings exceed a certain threshold this becomes a costly endeavor.

Software as a Service (SaaS) is exactly what it says on the tin. Checkfront offers a service application that is essentially distributed software; you pay a subscription fee to use it, similar to paying for a software license to to say, Microsoft Office. The price of Microsoft Office doesn’t change based on how well you are able to drive your sales with it, and nor should your booking software.

It’s likely that you already pay out several commissions on a booking. Perhaps it’s to the concierge that refers you, or the affiliate brought in the traffic—and don’t forget the credit card companies, especially the guests with reward programs. You can’t avoid paying a commission to the credit card companies or your payment gateway. Add in advertising and hard costs, and at the end of the day, you have a lot of people with their hand out for any given booking. What is left for the company? If your booking software hasn’t specifically driven a sale, don’t pay them.

Most companies have built in a commission model for booking agents that bring the customer to the business. To earn the commission the agent must confirm availability, schedule and take payment—a manual, time consuming process. How many of you have stood in the concierge line while guests ahead of you squander time exploring all the potential events and activities choices?

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