Economics of a Free Walking Tour

Summary

The author of the article describes their positive experience with a "free" walking tour in Venice, which operates on a tip-based system, and reflects on the economics and marketing strategy behind this business model.

Abstract

The article recounts the author's personal experience with a free walking tour in Venice, an alternative to traditional paid tours. Despite initial skepticism, the author found the tour to be enjoyable and ended up tipping generously. The concept of free walking tours is linked to Berlin's "honesty" bars and restaurants, where customers pay what they feel the service is worth. This model has become popular in Europe, with companies like Sandemans New Europe tours leading the way. The tours operate on a tip-based system, which often results in satisfied customers and positive reviews. The author suggests that the free walking tour model encourages more sign-ups and better experiences due to the lack of upfront costs and preconceived expectations.

Opinions

The author initially doubted the legitimacy of free walking tours, associating them with potential scams.
After participating in the tour, the author was satisfied with the experience and voluntarily paid a tip that exceeded the cost of some paid tours.
The author finds the marketing aspect of free walking tours intriguing, noting the potential for increased sign-ups and positive reviews due to the "free" aspect.
The author points out that the free walking tour model can lead to better experiences for tourists, as they come with no expectations and can only be pleasantly surprised.
The author mentions scrutiny faced by some free walking tour operators, such as Sandemans New Europe tours, for their business practices regarding payments to self-employed guides.

Economics of a Free Walking Tour

Rialto Bridge, Venice

Recently I was in Venice and because we had very little time, we decided to do a walking tour instead. A quick search on TripAdvisor listed walking tours as the 6th most exciting thing to do in Venice and that was enticing since the other 5 spots were the obvious ones.

A quick search on Google to find the best walking tours and I landed up with a few links which said “Free Walking Tour”. Thinking of these as scams, I clicked on the paid ones and found the prices to be around the scale of 25 Euros per person which was fine but the tours were all booked out for the dates we were looking at. With not too many options left, I clicked on the “Free Walking Tours” to find more and give it a try.

We were given a time and place and asked to arrive on time because the only way to know you would show up was when you show up ( you don't pay, remember). We reached the spot on time and found a person standing with a placard which said “Free Walking Tours”. He explained to us the concept of “Free Walking Tours” where he would show us around the city for 2 hrs and if we were happy, we could pay a tip. We walked around, had a great time, ended up paying 30 Euros in tip (for 2 people) and were very satisfied. Even took the pain of going to TripAdvisor to give them a 5 star rating since the tour was free, or was it ?

I got curious and started reading about the concept because I found this very exciting as a marketer. The concept of Free tours comes from Berlin’s long-established “honesty” bars and restaurants, where patrons pay what they think the meal is worth and since customers have the choice to decide, they end up paying close to what they would have paid otherwise and the bar owners receive great ratings on channels like TripAdvisor.

Europe is at the center of the Free Walking Tour culture with more than 70 companies running these tours across the continent. The most famous of these tours are the Sandemans New Europe tours, which pioneered the idea back in 2004, now runs its “famous free tours” in 18 cities — although it has come under scrutiny for its approach, which requires self-employed guides to pay a set fee per tourist, regardless of how much, or little, people tip.

The nature of the tour brings no hard and fast rules; some operators are more up front than others. Some avoid the word “free” or state that tips are not obligatory; some are run by certified guides as a business; others are just a weekend hobby.

What is exciting about this concept is the alternative. If these companies were charging 15 Euros instead of 25, they might have had less sign ups and fewer ratings because they would just be another alternative to the endless list of tour operators in Europe but by offering people the choice to show up (or not in case of bad weather) and then pay based on experience, means more sign ups and a much better experience because people come with no expectations because of the word “free” and you can only be positively surprised from there.

Next time you are in a city that offers a free walking tour, try to get one. If you have already been part of one, I would love to hear your experience.