How Free Tour Guides Usually Get Paid.
We lost some important audio on episode 25 with John O’Sullivan of Walks 101. So we tracked it down and I added it here because John talks us through how tour guides of free walking tours traditionally get paid and how he is trying to pay his tour guides a full-time salary.
Here is an edited transcription of our conversation.
Shane Whaley 0:26
So how are you compensating your tourguides? How does that all work?
John O’Sullivan 1:49
Yeah, it’s pretty interesting question right now, because I am at a bit of a crossroads, the way that free tours work throughout the world is pretty similar, most free walking tours, work with independent contractor tour guides, and they all are freelance guides.
At the end of the tour, they say you’re welcome to give a tip.
However, the company is actually a marketing agency, and they charge for every lead, they charge for every person who showed up on that tour. And the charge will vary. It’s usually somewhere in kind of the like in Australian dollars, like $3 to $6 range. So you can convert that to whatever currency you like.
Shane Whaley 2:28
So if I understand that correctly, so you charge the guide a fee for everyone who shows up.
John O’Sullivan 2:33
Yeah, so up until two months ago, I was charging guides $4 for every person who came on a tour. And so if a guide had 30 people on a tour, the guide would pay me $120 for the benefit of having given that tour.
Now, any guide who’s worth their weight would be able to make roughly around $10 per person. So 300 people on a tour, you make $300, as the tour guide, you pay the company $120 out of that, and everybody’s happy that’s in a utopian landscape, that works great.
And it’s also the thing that made me really fired up about free tours before I was talking about starting a business. And then I did free tours in the background. turned out I made better money as a free tour guide in London than I ever made in my career before or since it’s including the cost of the marketing fee on there.
It’s one of those things, a rare skill, being able to do free tours, you have to be able to combine theatrical ability, with guiding ability with a little bit of school teacher vibes as well. And also not being afraid to talk about money and not being afraid to talk about sales.
Anyway, that’s how the business model developed back in 2005. And to my knowledge, that’s how the vast majority of the world is doing free walking tours.
There are some really big problems with it, though. Namely that you have two parties with two different interests, the guide is interested in making as much money as possible, the company is also interested in making as much money as possible. And the way they do that is difference.
The guide only wants to get people who are likely to tip them lots of money. The company has no disincentive, just throw anybody on the tour or even if they maybe don’t even have mastery of language. And so that’s one of the pain points that happens with these tour companies.
And also there’s all sorts of other things, guides know that if it’s rainy, people going to tip this much, it’s sunny, they’re gonna tip this much, it’s June, they’re gonna tip this much.
Guides who lead these free tours, we really get to know what like, it’s humans are remarkably predictable. And so especially when you get large scale, you can get to know what your expected earnings are going to be. And you can get pretty good at forecasting that. We understand how much people are probably willing to spend on the tour.
And so what we’re going to do is we’re going to take all that money, and have that be ours as a company, and we’re going to pay the guides a competitive salary. That’s what I’m doing.
So I’ve just now hired my first two full time tour guides. And so they’re on 38 hours a week contracts, they get superannuation, that’s Australian for retirement funds, they get paid annual leave, they get all the benefits you would have in a normal job.
And that’s something that’s really hard to come by not just in free tours, but throughout the industry. I think that we have a problem in this industry, of commodifying guides of having all of our guides be freelancers, it’s really great in the summertime when I really need them, but good luck in the winter.
And I understand the need for it. Because we have a seasonal industry. But come on. Most companies have some degree of predictability even in the winter. And so what can we be doing to look after some of our best performing guides?
That’s a question that I haven’t quite figured out yet. But I’m actively trying to fix it. And the way that I’m trying to fix it is by taking on the risk as a business owner, because all the stuff that we talked about, about what the industry is doing about putting risk on the operators, I realized that I myself, was doing the same thing to my guides, I was putting the risk on them. And that wasn’t fair.
They just want to go make their money. And so I pay them a good wage, I pay them well above industry average. But it’s something that very much remains to be seen because I just started doing it two months ago.
And I would be curious to check back in with you and share with you about how it goes after we get through our first season.
Shane Whaley 6:17
Yeah, I’d be fascinated to learn more about it. Because first of all, I take my hat off to you, I think it’s the right thing to do.
But it’s a huge, huge risk, I guess the question I have is why you wouldn’t move to just paid tours. So you know exactly what you’ve got coming in, and you can budget and are sure you make a profit.
John O’Sullivan 6:34
I’ve had that advice from many, many business advisors.
And I get it, it’s a good piece of advice. But it’s not what I’m fired up about. Free tours are transformational.
I think that free tours are doing a service for the industry. Because without free tours, people will never experience how great a walking tour can be. They’re going to go to the hop on hop off bus, they’re going to go on to the river cruise are going to go to the sex museum or whatever thing is getting tourists excited, and they’re not going to really sink their teeth, into the city, I get this 18 year old German to come on my tour. And they love it.
They asked questions the entire time. And they’re really fired up. And at the end, they come up to me they shake my hand and say, I’m really sorry, I’m a backpacker, I only can give you $2. But you’re worth so much more. And that is the best I will take that over $50 note because it means that I’ve meant something to that person.
And you see the result of this because free tours have been operating for nearly 15 years now. And so now those people who started in 2005 who are 18 years old, are coming back to their families. And they’re the ones giving the $50 notes.
And so I’m not interested in running a traditional tour business. If I wanted to do that it would have been a much more direct path to success, but it’s not the thing that gets me fired up, we are accessing a group of people who never would have done a free walking tour and we’re serving them.
Shane Whaley 7:47
I’m taking my hat off to you because I can hear the passion in your voice for walking tours. And I can only wish you all the very best and what you’re trying to do because you’re trying to do this the right way, which is tough.