Types of Tour Costs — Cost Sheet, FIT Costing vs GIT Costing Explained
Travel Trade · Part 2 · Module 24
Types of Tour Costs — Cost Sheet, FIT Costing vs GIT Costing Explained
Understanding the different types of costs in tour operations is essential for profitable pricing. Miss a cost category and your profit evaporates. Understand them all and you build a sustainable business.
💰 Types of Costs in Tour Operations
1. Fixed Costs
Costs that remain constant regardless of the number of tourists. Cannot be reduced by reducing tour participants. Examples: chartered aircraft, blocked hotel rooms (contracted minimum), guide fees (per day not per person), coach hire (per day). Must be recovered across all tourists — basis of GIT pricing.
2. Variable Costs
Costs that change directly with the number of tourists. Examples: meals, entry tickets, individual airport transfers, travel insurance premiums, per-person visa fees. Easy to calculate — multiply unit cost by number of participants.
3. Semi-Variable (Mixed) Costs
Partly fixed, partly variable. Examples: accommodation (fixed per room, variable by occupancy type), transport costs (fixed base + variable fuel/toll per km). Most complex to calculate accurately.
4. Direct Costs
Costs directly attributable to a specific tour — hotels, transport, guides, entry fees, meals. All costs the tourist directly benefits from. These are the tour’s “cost of goods.”
5. Indirect/Overhead Costs
General business costs allocated across all tours — office rent, staff salaries, utilities, marketing, GDS subscription, insurance. Must be recovered through the agency’s margin.
📊 FIT Costing vs GIT Costing
FIT (Free Independent Tour) Costing
Costed on individual basis. Each component priced at individual/FIT rates. Higher per-person cost — no group discounts. More flexibility to customise. Client pays premium for personalisation. Example: 2-person Kerala trip — individual room rates, private car, personal guide.
GIT (Group Inclusive Tour) Costing
Fixed costs divided across all participants — the more people, the lower the per-person cost. Group room rates (twin sharing), group coach (per vehicle not per person), group entry tickets (discounted). Minimum group size typically 10-15 pax for meaningful savings. Example: 20-person Rajasthan tour — contracted hotel rates, 1 AC coach shared by all, group entry rates.
📋 Sample Cost Sheet Structure
Standard Tour Cost Sheet Components
A: Accommodation (room rate × nights × rooms)
B: Transport (coach/car/rail/air — all legs)
C: Meals (if not in hotel plan)
D: Guide fees
E: Entry tickets and sightseeing
F: Transfers (airport/station, inter-hotel)
G: Travel insurance premium
H: Visa and documentation fees
I: Porterage and tips allowance
J: Contingency/Emergency fund (5% of total)
Total Cost Price = A+B+C+D+E+F+G+H+I+J
Agency Margin = 15-25% on cost price
GST = 5% on package
Selling Price = Cost + Margin + GST
B: Transport (coach/car/rail/air — all legs)
C: Meals (if not in hotel plan)
D: Guide fees
E: Entry tickets and sightseeing
F: Transfers (airport/station, inter-hotel)
G: Travel insurance premium
H: Visa and documentation fees
I: Porterage and tips allowance
J: Contingency/Emergency fund (5% of total)
Total Cost Price = A+B+C+D+E+F+G+H+I+J
Agency Margin = 15-25% on cost price
GST = 5% on package
Selling Price = Cost + Margin + GST
🎯 UGC NET Key Points — Module 24
◆ 5 cost types: Fixed, Variable, Semi-variable, Direct, Indirect/Overhead
◆ Fixed costs: chartered aircraft, contracted hotel rooms, coach hire, guide per day
◆ Variable costs: meals, entry tickets, insurance premiums, visa fees per person
◆ FIT costing = individual rates, higher per person, personalised
◆ GIT costing = group rates, lower per person, fixed departures
◆ GST on tour packages in India = 5%
◆ Agency margin: typically 15-25% on total cost price
◆ Contingency provision: 5% of total cost for emergencies
◆ Minimum group for meaningful GIT discounts: 10-15 pax
◆ Fixed costs: chartered aircraft, contracted hotel rooms, coach hire, guide per day
◆ Variable costs: meals, entry tickets, insurance premiums, visa fees per person
◆ FIT costing = individual rates, higher per person, personalised
◆ GIT costing = group rates, lower per person, fixed departures
◆ GST on tour packages in India = 5%
◆ Agency margin: typically 15-25% on total cost price
◆ Contingency provision: 5% of total cost for emergencies
◆ Minimum group for meaningful GIT discounts: 10-15 pax