In short
Distribution cost is the total cost of selling travel through a channel or seller path. It can include commercial fees, technology overhead, payment cost, content management, and servicing effort. The concept matters because revenue quality depends on what it costs to reach and serve the traveller.
What the cost includes
Distribution cost is broader than a visible fee. It includes the commercial and operational cost of reaching a traveller through a particular channel. That can mean technology cost, payment handling, content management, reporting, and the service work created after the sale.
Some costs are easy to see. Others appear later, when a traveller needs help or when channel complexity makes the offer harder to manage.
Why it differs by channel
Direct and indirect channels have different economics. A direct channel may give more control but still carry acquisition and technology costs. An indirect channel may bring reach but add fees, data limits, or service complexity.
This means a sale with the same top-line value can have different commercial quality depending on where it came from.
How to use the metric
Distribution cost is useful when it is read alongside revenue, conversion, and service outcomes. The goal is not always to minimise cost. Sometimes a higher cost channel brings valuable reach or a better traveller segment.
For ancillary merchandising, the key question is whether the added revenue is worth the cost of presenting and servicing the offer.
That question should include the full journey. A low-cost sale can become expensive if it creates confusion, rework, or avoidable traveller contact later.
Frequently asked questions
What is distribution cost?
It is the cost of selling travel through a channel, including commercial, technology, payment, and servicing costs.
Is distribution cost only a fee?
No. It can include visible fees, operational effort, service contacts, and technology overhead.
Why does distribution cost matter for ancillaries?
Ancillary revenue should be assessed against the cost and effort required to present, sell, and service the item.