Tour and activity operators work incredibly hard to deliver great experiences, yet many lose profits not because of low demand but because of preventable pricing mistakes. These errors usually stem from incomplete cost tracking, guessing instead of analyzing, or copying what competitors charge. The good news is that these pitfalls are avoidable with the right frameworks, clearer revenue analysis, and an honest look at your numbers.
Below is a complete breakdown of the most frequent pricing mistakes, why they happen, and the specific corrections that protect margins and profitability.
Not accounting for full business costs or overhead when determining prices
Forgetting to include your own compensation as part of cost structure
Pricing for direct bookings only and ignoring distribution channels
Setting prices based on competitors instead of data
Undervaluing your unique experience and failing to charge for real value
Using the same price all year without demand-based adjustments
Running custom tours without planning fees or premium rates
Mismanaging discounts and destroying long-term customer expectations
Ignoring rising insurance costs or currency risks
Not knowing the break-even point for each tour or timeslot
Search behavior across Google, Gemini, Perplexity, and industry forums shows operators consistently asking:
“How do I determine prices for my tour?”
“Why are my margins so low even when my tours are full?”
“How do I calculate all my costs correctly?”
“Should I copy competitor pricing?”
“How do I adjust for seasonality or capacity?”
These questions reveal two major patterns:
Most operators underestimate their true costs, especially overhead.
Pricing decisions are often emotional rather than data-driven, influenced by fear of scaring customers away.
Industry research and OTA reports show that operators with dynamic pricing and strong cost tracking outperform those using static or competitor-based pricing by a wide margin. FareHarbor reported that operators using structured pricing frameworks saw up to 22 percent higher revenue after implementing simple peak and off-peak tiers.
Many operators only track on-tour costs and ignore the invisible but essential operating expenses that must be allocated to each departure.
Common overlooked overhead includes:
Guide onboarding and training
Booking software fees
Credit card processing fees
Website maintenance
Software subscriptions
Insurance
Equipment depreciation
Customer service labor
Rent and utilities
If these costs are not allocated across your tours, the price you set may cover the guide and tickets but fail to cover the business itself.
A tour can show a healthy gross profit yet still produce a net annual loss because overhead is missing from the equation.
Many small operators eat last, taking whatever is left after expenses. This leads to burnout and a business model that cannot scale.
A guide rate if you guide the experience
A management salary or owner compensation
A marketing or operations fee built into the margins
If your pricing framework sustains everyone except you, the model is broken.
Many operators price assuming zero percent commissions. Later, they attempt to expand onto OTAs but discover that a 20 to 30 percent commission destroys their margins.
Calculate your weighted average commission across distribution channels, such as:
| Channel | Commission | Share of Bookings | Weighted Cost |
|---|---|---|---|
| Direct Web | 0 percent | 40 percent | 0 percent |
| OTA | 25 percent | 50 percent | 12.5 percent |
| Concierge or Hotel | 15 percent | 10 percent | 1.5 percent |
| Blended Commission Cost | — | — | 14 percent |
This blended commission must be added to your cost base to set sustainable prices.
Your break-even point tells you the minimum revenue needed to cover all costs associated with a specific departure. Without this number, trip minimums are often set too low.
Direct costs
Blended commission
Allocated overhead
Your compensation
Vehicle or equipment depreciation
Your trip minimum must always sit above break-even to produce meaningful profit.
This is one of the most common and costly mistakes. Competitors may:
Have lower cost structures
Pay lower wages
Operate illegally
Not be profitable themselves
Competitor pricing is a positioning reference, not a pricing framework.
Use competitor pricing only to determine where you want to position yourself, such as premium, mid-market, or value, not what your actual prices should be.
Many operators market themselves as interchangeable with competitors, when in reality their experiences may deliver unique outcomes or higher value.
Examples include:
A food tour positioned as a cultural experience rather than sampling food
A kayak trip positioned as a corporate team-building activity
A historical tour positioned as an educational program for schools
When the value is unclear, the price remains low.
Ask:
What transformation does this tour offer?
How does it solve a problem or produce an outcome?
Why is this worth more than similar tours?
The most successful operators communicate value clearly and price accordingly.
Demand in travel is not constant. If prices stay the same:
You undercharge during peak season
You miss filling slower days
You reduce total annual revenue potential
Peak versus off-peak
Weekend versus weekday
Morning versus afternoon
Seasonal pricing
Last-minute pricing
Simple three-tier systems have generated more than 20 percent revenue increases for some operators.
Low margins make it impossible to reinvest, hire, or absorb unexpected costs. Margins are not optional and should be protected.
Most operators aim for 15 to 25 percent net margin after all inputs. Cutting margins rarely solves problems and often leads to long-term instability.
Custom tours require:
Consultation
Planning time
Custom vendor communication
Additional admin labor
Many operators absorb this labor at no charge.
Charge 30 percent higher than private tours
Add non-refundable planning fees
Invoice for extra hours of customization
Operators who implement these structures often save hundreds of hours per year.
Discounting can boost short-term revenue but destroy long-term value if misused.
Permanent discounts
Always-on sales
Training guests to wait for a deal
Discounting full-price demand
Price slashing instead of offering value-adds
Discounts should be used strategically:
To fill unused capacity
To reactivate abandoned carts
To stimulate demand in slow weeks
Insurance for some adventure sectors has increased significantly in recent years. If you do not factor this into overhead, your pricing will be too low.
Longer booking windows and international travel create exposure to currency fluctuations.
Five to eight percent for standard international trips
Higher for volatile currencies or long lead times
Adding this buffer protects against margin erosion.
Use a pricing framework that includes direct costs, overhead, distribution commissions, taxes, and a target profit margin. Then evaluate demand, value, and competitive positioning to determine final price.
No. Competitor pricing offers useful benchmarks but cannot replace actual cost and margin calculations inside your own business.
Most operators review quarterly, but at minimum annually or when new costs, demand shifts, or insurance changes occur.
Failing to track full business costs. This leads to underpricing even when tours appear profitable on the surface.
Use strategic, limited discounts tied to demand, forecasting, and capacity. Avoid long-term or permanent discounts that erode margins.
Track every cost, especially overhead and distribution
Protect profit margins and owner pay
Know your break-even point for every tour
Use demand-based pricing instead of static pricing
Charge premiums and planning fees for custom experiences
Use discounts tactically, not reactively
Build buffers for insurance and currency fluctuations