How do I calculate the margin of a tour package?
A package's margin comes from adding up its lines: accommodation, transport, excursions, fees. For each line you compare the supplier cost with the price you sell at. The sum of the differences is the booking's margin.
Short answer
- A line's margin = (selling price − cost) × quantity.
- The booking margin is the sum of the line margins.
- The percentage can be taken on the selling price (margin) or on cost (markup).
- Prices in the software are VAT-inclusive, so the margin below includes VAT.
Worked example
Example (illustrative figures): a city break for 2 people, with four lines.
A margin of EUR 370 is 20.3% of the selling price (370 / 1,820) or a 25.5% markup on cost (370 / 1,450).
Example: margin per line (EUR)
| Cost | Sale | Margin | |
|---|---|---|---|
| Hotel | 900 | 1,080 | 180 |
| Transport | 400 | 480 | 80 |
| Excursions | 150 | 200 | 50 |
| Booking fee | 0 | 60 | 60 |
| Total | 1,450 | 1,820 | 370 |
Commercial margin and VAT
The figure above is the VAT-inclusive margin (selling price minus cost, both VAT-inclusive). Under the special regime for agencies (art. 311 of the Fiscal Code), the VAT in the margin is extracted with the fraction 21/121, so the margin excluding VAT is 370 − 370 × 21/121 = EUR 306 (rounded). Check the treatment with your accountant.
Common mistakes
- Forgetting a cost line, such as the transfer, so the margin looks higher.
- Confusing margin (on sale) with markup (on cost).
- Adding amounts in different currencies.
- Forgetting that the line margin does not deduct the agent's commission, which is tracked separately.
How 4AgencyTravel helps
- Each line has cost, selling price, VAT rate and supplier, and the margin is calculated per line and per booking.
- The margin shows per booking; the margin report totals by period and currency, and the sales report groups by agent, destination or month. There is no per-package margin report.
- Amounts in different currencies are not summed.