Question 1

Why shouldn't I just divide the guide's salary equally among the tours?

Accepted Answer

Equal division is inaccurate because some tours require significantly more time and effort than others. Allocating costs based on hours worked provides a true reflection of where resources are spent, leading to better pricing and profitability analysis.

Question 2

Should I include preparation and travel time in the hours?

Accepted Answer

Absolutely. Any time the guide spends that is directly attributable to a specific tour—including research, client communication, and travel to a starting point—should be included in that tour's hours for the most accurate cost allocation.

Question 3

What other shared costs can be allocated this way?

Accepted Answer

This same principle can be applied to other shared resources. For example, you could allocate the monthly cost of a tour vehicle based on the mileage used for each tour, or office administrative costs based on the number of bookings per tour.

Question 4

What if a guide works on more than three tours?

Accepted Answer

This calculator is designed for simple scenarios. If you have more complex needs, such as a guide working on many tours, we recommend using a spreadsheet. You can use this tool's 'Cost Per Hour' calculation as a starting point and apply it to as many tours as you need.

Question 5

How does this allocation help me set tour prices?

Accepted Answer

By knowing the true cost of a guide for a specific tour, you can establish a price floor. You know that the price must, at a minimum, cover the allocated guide cost, its other variable costs, and a portion of your fixed business overheads to be profitable.

Tour Guide Cost Allocation Tool

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Understanding Cost Allocation

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