In seminal blog post (3 Steps to Identify Most Appropriate Travel Technology Solution for Your Business) Mahendra Yadav (CEO, Tavisca Solutions) discussed the steps to identify the right resources and vendors as part of your travel technology strategy. Assuming, most of my readers already know how to formulate a budget strategy (well! I know this is not easy, if you like to hear more about how to form a budget strategy, let us know), this post explains the cost of different approaches to acquiring a travel agency software platform, so that you can easily put a number to your technology in the budget.
Proprietary travel software:
What is proprietary travel software?
A proprietary solution is exclusive to your firm or company. No other company has access to this software; the software is typically hosted in your own environment (On your server or via your IT infrastructure) or managed by a vendor solely for you.
Advantages: – As the software completely belongs to you, you can add features that appeal to your customers and business vision. You can also customize its features and functionality to complement your ongoing and future needs.
Expense: – Expense is one of the major drawbacks of a proprietary software package. It will generally charge a proprietary licensing fee to utilize the product of any travel technology company. Depending upon the nature of the software, this licensing fee can be fairly expensive; it also incurs an ongoing support and maintenance fee. Remember that proprietary software is a CAPEX, where you need to constantly invest in upgrading the platform.
Cost: –The average cost of proprietary travel software can be in between $50,000 to $5 mil. Honestly, there is no upper cap in this category; the cost completely depends on what you want your software to do.
Who should go for a proprietary Travel Software:-
- If you are a big enterprise with an average of $20 mil and above monthly turnover.
- If you are confident about changing and innovating the technology, through your organizational resources.
- Let’s face it , you should have the necessary funding in-hand.
SaaS based or Hosted travel Software:
What is SaaS or Hosted travel software?
SaaS – Software as a Service – means that a vendor or service provider, take over the full responsibility of your software and the IT infrastructure required. In this case, you don’t own the product completely, but you still have the flexibility and control to use the software as per your needs and requirements.
Advantages: – The main advantage of using SaaS travel software is its cost and the freedom it offers you, to focus on your core business and selling travel services! It is an OPEX model of expenditure and means that your organization can control costs better. Most importantly the innovation in SaaS technology is continuous. The collective vision of multiple businesses that use such a platform drives innovation and change much faster. This means your technology is one step ahead of the future.
Expense: – These cloud or SaaS based systems are sought after as the most efficient travel content delivery mechanism for achieving business outcomes such as cost savings, speed, agility, and automation. These are definitely more affordable than enterprise travel platforms.
Cost: – The average cost of SaaS based travel software can be anywhere between $15000 to $25000 plus the additional cost for customizations that you would like to make. Also, in most cases there is a per transaction cost that varies from business to business.
Who should go for SaaS or Hosted Travel Software:-
- Any small or mid-sized travel business with an average of $1mil and above monthly turnover.
- If you are a startup and have some funding to try out your business ideas.
Free travel software:
What is free travel software?
Usually something is only offered for free when there is a catch somewhere. Most of the time a free technology is offered when a travel content distributor or wholesaler tries to sell or promote their content through you and in the process both makes money. In the travel industry, this is commonly known as the ‘affiliate program’ (it might not necessarily always be free). However, when a technology company offers technology for free, be sure that there are hidden charges. For a technology company, it is but impossible to offer free technology and be good at it.
Advantages: – The major advantage is, you can start a travel business with near ZERO (Zero Equipped Real-time Operations, yes that is what I call this model!!) investment. You can surely make some money using such free travel software, if you are smart enough.
Expense: – free
Who should go for a ZERO Travel Software?
- If you are a home based or individual agent and do not rely on conventional suppliers (API based) to provide you inventory (manage it yourself kind of inventory).
- If you find a good travel inventory being offered that will help your profits.
- If you understand the travel distribution system well enough and find a partner to be affiliated with.
NB: Previous post in this series: Exploring the nexus of travel & technology – Types and components of Travel Software
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N.B: This post has been written by Koeli Chatterjee. Koeli serves as Manager Marketing & Communication at tavisca. You can directly reach Koeli at – email@example.com.
For product demos and queries contact – firstname.lastname@example.org