How to Price a Tour Package (Markup Formula + Worked Examples)

Underprice and you work for free; overprice and you lose the booking. Most agencies price by gut feel and discover the leak only at year-end. Here's a repeatable method.

Step 1: Cost every component (the "net" cost)

List the per-trip cost of everything you pay a supplier for:

• Accommodation (per room per night)
• Transport (vehicle + fuel + driver + parking/tolls)
• Meals included
• Activities, permits, entry tickets
• Guide / tour manager
• Helicopter or special segments (for Char Dham, Kedarnath heli is a big one)

This total is your net cost. Be honest — the costs you forget are the ones that eat your margin.

Step 2: Markup vs margin (don't confuse them)

This trips up everyone:

• Markup = profit as a % of cost. Cost ₹100, 25% markup → sell at ₹125.
• Margin = profit as a % of selling price. Sell at ₹125, profit ₹25 → 20% margin.

A "25% markup" is only a "20% margin." Decide which you mean, and apply it consistently. To hit a target margin, the formula is:

Selling price = Net cost ÷ (1 − margin%)

So a ₹100 net cost at a 25% target margin sells at ₹100 ÷ 0.75 = ₹133.

Step 3: Per-pax and group slabs

Fixed costs (a vehicle, a guide) spread across the group, so per-person cost drops as the group grows. Price in slabs — 2 pax, 4 pax, 6+ pax — rather than one number. This is also a natural upsell: "bring two more and the per-head price falls."

Step 4: Add the hidden costs

Before you publish a price, layer in:

• Payment-gateway fees (~2%)
• Cancellation/refund buffer — a few cancellations a season are inevitable
• Your time — sales, coordination, support. It's not free.

Step 5: GST and TCS sit on top — separately

Quote your package price, then add tax as separate lines, never buried in the package. GST per your scheme (see the GST guide) and, for overseas packages, TCS. Customers trust transparent pricing and you keep clean books.

Worked example: a Char Dham package

Net costs (per pax, 4-pax group)
  Hotels (5 nights)            ₹  9,000
  Transport (share of vehicle) ₹  7,500
  Meals                        ₹  3,000
  Permits + pujas              ₹  1,500
  Tour manager (share)         ₹  2,000
  Net cost                     ₹ 23,000

Target margin 25%
  Selling price = 23,000 ÷ 0.75 = ₹ 30,667 → round to ₹ 30,999
  GST @ 5%                      ₹  1,550
  Customer pays                ₹ 32,549

Your gross profit per pax is ~₹8,000 — before hidden costs. Now subtract gateway fees and a cancellation buffer and you see the real number. That's the discipline most agencies skip.

Make it repeatable

Price once per package, save it as a template, and reuse it for every enquiry — adjusting only the variable bits (dates, group size). Pricing from a saved template beats re-doing the math (and re-making the mistakes) on every WhatsApp quote. That's how general tour operators keep margins consistent across a busy season.