TL;DR
Revenue-share pricing ties your fee to bookings or revenue your product handles, which lowers the barrier to buy and grows with the hotel.
It works best when your product directly creates measurable revenue, such as bookings, upsells or new distribution, and the attribution is hard to dispute.
The costs are seasonal income, billing disputes and, for payments, a lower gross margin, as SiteMinder's 33.7% transaction margin shows.
Most hotel tech vendors are better served by a hybrid: a base subscription plus a capped share of the revenue they create.
Every hotel tech founder eventually asks whether they should stop charging a flat monthly fee and take a percentage instead. The logic is attractive: hotels already understand commission because they pay it to online travel agents, a percentage lowers the price of entry, and your revenue grows when your customers do. The risks are less obvious until you are living with them.
This post sets out the pros and cons of revenue-share pricing for hotel software, using public examples, and ends with a test for whether it suits your product.
What revenue-share pricing means
Revenue-share pricing is a model in which a software vendor charges a percentage of the bookings, payments or revenue its product handles or creates for the hotel, instead of or alongside a fixed subscription. In hotel tech it usually takes one of three forms: a commission per booking (booking engines, metasearch, distribution), a percentage of payment volume (payments), or a share of incremental revenue (upsell and revenue tools).
Hoteliers know the model well from the other side. Booking.com's partner help page describes its commission as a set percentage of the total booking amount, including the room rate and additional fees such as cleaning and service fees, and frames it as paying "only for the value we deliver". Any vendor proposing a revenue share is pitching into that existing experience, good and bad.
What it looks like in practice
SiteMinder is the clearest public example of a hotel software company shifting towards transaction revenue. Its FY25 earnings release reported subscription revenue of $139.1m and transaction revenue of $85.3m, with transaction revenue growing 24.8% against 13.6% for subscriptions. Transaction ARR grew 50.3% to $114.1m. The release also shows the trade-off: underlying subscription gross margin was 86.4%, while underlying transaction gross margin was 33.7%.
Morningstar's analysis explains why. Payment costs scale with sales, so payments revenue carries a lower margin. Morningstar notes that SiteMinder takes an additional commission on bookings generated through Channels Plus, a product that combines smaller demand channels, and describes this as sharing in the value it creates. It also gives SiteMinder's valuation a High uncertainty rating, partly because transaction revenue ties the company more closely to the cyclical travel industry.
Smaller vendors use the model too. Exely's booking engine calculator compares a fixed-fee engine with its own commission-based booking engine at 4%, pitching that it "charges only on successful sales". On the other side, Stayntouch markets a commission-free booking engine and argues that hotels should compare total cost of ownership rather than the headline fee. Both approaches can win, and they win with different buyers.
The pros
Advantage | Why it matters in hotel tech | Watch out for |
|---|---|---|
Lower barrier to buy | A hotel pays little until the product produces bookings or revenue, which helps with small independents | Low early revenue per property while CAC stays the same |
Price grows with the customer | Revenue rises as occupancy, rate or volume rise, without a price increase conversation | It falls too, in low season and downturns |
Easy to justify | "You only pay when it works" is a simple argument for the general manager to take to the owner | Only if attribution is clear |
Aligns incentives | The vendor is paid for outcomes, which supports a value-based sales story | The hotel may question how outcomes are counted |
Familiar model | Hoteliers already pay commission to OTAs and understand the mechanics | They also resent it, so the word commission carries baggage |
The cons
Disadvantage | Why it matters in hotel tech | How vendors manage it |
|---|---|---|
Seasonal and cyclical revenue | Hotel revenue swings by season and with the travel cycle, and so will yours | A base subscription or monthly minimum |
Gets expensive for busy hotels | The most successful customers pay the most and are most likely to ask for a flat fee | A cap or tiered rate that falls with volume |
Attribution disputes | Hotels will challenge whether a booking or upsell was really created by your tool | Clear rules on what counts, written into the contract |
Lower gross margin on payments | SiteMinder's FY25 transaction margin was 33.7% against 86.4% for subscription | Charge a share on value created, not only on volume processed |
Harder forecasting and billing | Revenue depends on data from the hotel or channel, billed in arrears | Automated reporting the hotel can see |
The busy-hotel problem deserves emphasis. A percentage that feels cheap to a 30-room property in its first month can look expensive to the same property in peak season a year later. That is the point at which a hotel starts asking competitors for a flat-fee quote. If you go down this route, build the cap in from the start rather than negotiating it under pressure. Our guide to raising prices for existing hotel customers shows how hard it is to change terms later.
When revenue share fits
Use these five questions. If you answer yes to four or more, a revenue-share or hybrid model is worth testing.
Does your product directly create revenue the hotel would not otherwise have, such as bookings, upsells or new channels?
Can you measure that revenue from your own system, without relying on the hotel's reports?
Is your gross margin on that revenue high enough after third-party costs?
Can your business absorb a quiet season or a travel downturn without cutting the team?
Are your target hotels small enough that a low entry price changes the buying decision?
Products that save time or reduce costs, such as housekeeping, maintenance or most PMS functions, usually fail the first two questions. For those, a subscription priced on rooms or properties is easier to defend. Our overview of pricing models for hotel tech software covers the alternatives.
The hybrid most vendors end up with
In practice, pure revenue share is rare outside distribution. A more common structure is a base subscription that covers your fixed cost of serving the hotel, plus a share of the revenue your product creates above a baseline, with a monthly cap. SiteMinder's own mix of subscription and transaction revenue shows the pattern at scale.
Base fee covers support, hosting and onboarding, so a quiet month does not leave you serving a hotel at a loss.
Revenue share applies only to revenue you can attribute clearly, such as bookings through your engine or upsells accepted through your tool.
Cap limits the hotel's exposure in peak season and removes the main reason to switch to a flat-fee competitor.
Annual review lets both sides check the numbers and adjust tiers.
The same thinking applies to contract length. See our comparison of annual or monthly contracts for hotel software for how terms interact with pricing.
How to test it without betting the company
Offer revenue share as an option on one product, to new customers in one segment.
Set a minimum monthly fee and a cap from day one.
Track win rate, revenue per property, gross margin and churn against your subscription cohort.
Run the test across a full year, so high and low season are both included.
Decide on the data, not on the first quarter's bookings.
If deals are being lost on price, check whether pricing is really the problem first; our guide to telling a pricing problem from a sales problem helps. Pricing is one part of a wider hotel tech GTM strategy, and changing the model will not fix a weak value story.
The verdict
Revenue-share pricing suits hotel software that directly creates measurable revenue and can live with seasonal income. For most other products, a subscription is simpler and more predictable. Where you do use it, a hybrid with a base fee, clear attribution and a cap gives you the upside without leaving your best customers looking for a cheaper flat fee.
If you are unsure whether your pricing model is costing you deals or margin, a free revenue leak audit will show where pricing is leaking revenue.
Frequently Asked Questions
What is revenue-share pricing in hotel software?
Is revenue-share pricing better than a subscription?
Why do some vendors market themselves as commission-free?
Does revenue-share pricing affect gross margin?
How should a vendor test revenue-share pricing?
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