Guide for tour operators and agents
How to price a tour package: a step-by-step cost sheet
A good package price starts with a cost sheet, not a guess. Here is the method: list every cost, divide it by the group, add a markup you understand, show taxes on their own lines, and offer options.
Step 1: list every cost
- Accommodation: rate per room per night, number of rooms, nights, meal plan and any extra bed.
- Transport: airport and inter-city transfers, a private car or coach for sightseeing days, and internal flights or trains.
- Activities and entry tickets, guides and permits.
- Meals that are not part of the hotel plan.
- Visa, insurance and any fees you pay on the client’s behalf, if you include them.
- A buffer for currency movement and fuel or rate changes between quote and booking.
Step 2: split the cost by group size
Some costs are per room, some per vehicle and some per person, so the per-person price changes with the group. A car costs the same for two travellers or four, so it is cheaper per head for a family than for a couple. Work out costs for the actual number of adults and children, and the room configuration, not an average.
Step 3: add a markup you understand
Decide whether you price by markup on cost or by margin on the selling price, and use the same method every time. For a cost of ₹31,500, a 15% markup gives ₹36,225. A 15% margin gives ₹37,059, because you divide the cost by 0.85. See how much travel agents charge for the full comparison.
| Method | Formula | Price on ₹31,500 cost |
|---|---|---|
| 15% markup on cost | cost × 1.15 | ₹36,225 |
| 15% margin on price | cost ÷ 0.85 | ₹37,059 |
Step 4: show taxes on their own lines
Add GST, and TCS on overseas packages, as separate lines above the grand total. This is clearer for the client and avoids surprises after acceptance. How each tax applies depends on your registration and the package, so confirm the treatment with your CA.
Step 5: offer options and set a validity date
- Offer two or three options, for example Standard, Deluxe and Luxury, that differ in hotels and transfers. Clients choose instead of negotiating one number.
- State a validity date, because hotel and flight prices change.
- List inclusions and exclusions in plain lines, and give payment and cancellation terms.
- Keep your cost sheet private. Clients see the selling price, not supplier rates.
Common pricing mistakes
- Quoting per-person prices from a couple’s cost for a family, when room and car costs differ.
- Forgetting park fees, permits, tolls or driver allowances.
- Mixing markup and margin so the trip earns less than planned.
- Adding taxes after the client accepted.
- Quoting with no validity date, then honouring an old price months later.
Turn the cost sheet into a client quote
Build the itinerary and attach up to three priced options with tax lines. The client compares them and accepts one in a portal.
Questions answered
How do I calculate the price of a tour package?
Add all supplier costs for the actual group, including accommodation, transport, activities, meals and fees. Add a buffer if needed, apply your markup or margin, then add taxes on their own lines. Divide the total by the number of travellers to show a per-person price, and check that it matches what the client will actually pay.
What is the difference between markup and margin?
Markup is a percentage added to cost, and margin is the share of the selling price that is profit. A 15% markup gives about a 13% margin. To get a 15% margin, divide the cost by 0.85. Using them interchangeably is a common cause of under-earning.
Should I show the per-person or the total price?
Show both. Per-person prices help clients compare, and the total shows what they pay. State the room configuration and the number of travellers the price is based on.
Can I keep my cost sheet in a spreadsheet?
Yes, a spreadsheet is a good place for the cost sheet. The quote the client sees should be separate, with only the selling price, options and taxes. Itiner lets you attach options, inclusions and tax lines to the itinerary itself and keeps supplier costs out of the client view.
How often should I update my rates?
Whenever a supplier changes them, and at least each season. Put a validity date on every quote, and re-quote if the client takes longer than that to decide.
Related: how much travel agents charge, travel quotation format, importing a supplier PDF quote.