So, let's explore together why we raised the issue of Collection in travel.
Let's consider the following figures:
Flight service:
- Ticket cost: 560 EUR
- Agency mark-up: 25 EUR
- Cost of sales for the ticket: ~ 15 EUR
- Profit before taxes: 10 EUR
-
If the customer needs to be credited for 2 months with an average interest rate of 2% it means an additional cost of sale of : 11.2 EUR
This translates into the following calculation:
- Ticket cost: 560 EUR
- Agency mark-up: 25 EUR
- Cost of sales for tickets: ~ 15 EUR
- Additional cost of sales for crediting: ~11.2 EUR
- Profit before taxes: -1.2 EUR (actually a loss)
*Note: This example is a simple theoretical one, just to exemplify the previous statement. Reality is more complex than that and it depends on multiple factors: economy, interest rate, sales channel, conversion rate, technology used etc.
