Tourism PRODUCT and Development Notes 6– COSTING AND PRICING A TOUR

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1、PRODUCTDEVELOPMENT–COSTINGANDPRICINGATOURCOSTINGANDPRICINGATOUR●twotargetsinpricingatour:earnareasonableprofitareasonablepricethatclientswillbemotivatedtopurchase●considerations:actualcostsexchangeratebuffer-ifforeigncurrencyisinvolved,allowsbufferforthefluctuationsofexchangeratestourtypet

2、argetedmarketsacompany‘srequiredprofitlevel(mark-up/profitmargin)-toolow:unprofitable-toohigh:lowsales-basedupondatafrommarketresearchonthegeneralmark-uplevelandcompetions’prices●verycarefulcalculationhavetobedonetoavoiderrorsanderrorscouldbeveryexpensiveforatourcompany●payattentiontoallde

3、tailsofdifferentareasinvolved●theprofitpercentagewillvaryfromonetourtoanotherwithinthemenuoftoursofferedbythesamecompany●onewayofpricingatouristoreviewthebrochuresofsimilartoursofferedbycompetitors●fornewanduniqueproduct,undertakeamarketresearchtodeterminethepriceNATUREOFCOSTS●variablecost

4、sversusfixcostsVariableCosts●varywiththeactualnumberofparticipantsonthetour,e.g.mealsFixedCosts●expensesthathavetobeincurredregardlessofnumberofparticipants●doesnotvaryinregardtosalesvolumedonotchangewiththenumberoftourparticipants●e.g.charterrates,ratesbasedonaminimumnumberofpassengers,es

5、cortfee,tourguidefee,●mustbe‘broken’byacertainnumberofpeopleonthetour●thetotalcostofthatitermisdividedbytheminimumnumberofpeopleBreakevenPoint●thepointatwhichtheincomederivedfromthesaleofatourisexactlyequaltotheexpendituresincurredinrunningthetour,i.e.nolossandnogain●canbeidentifiedinterms

6、ofthenumberofdollarsofsalesrequired(pricemultiplenumberofparticipants)orintermsofthenumberoftourmembersrequiredthesmallernumberoftourmembersconstitutingthebreakevenpoint,thelargertheperpassengercostwillbeGATEGORIESOFCOSTSGeneralGuidelinesWhencheckingthecostofanytravelproducts,thefollowinga

7、reasofavendor’squotationhavetobecarefullyconsidered:●Threetypesofcostingbasisusedbyvendors:commissionnetratecharterrateCommission-travelagentreceivesapercentageofsalesNetRate-touroperatornormallyworkonthisbasis-suppliersratesarequotedonanetnon-commissionableba