This transcript was generated from the episode audio and may contain minor errors.
One time I was in my favorite city in the whole world, which is Sydney, Australia, and I went on a free walking tour. This free walking tour was advertised, I don't know, in my hostel or whenever I was looking online for, you know, things to do in Sydney, or I wanted to explore a part of the city I hadn't been before. Anyway, I went on this free walking tour and had a great experience. At the end of this free tour, I gladly handed over something like $15 or $20. How is such a thing possible?
It's because of the unique business model these kinds of tours have, where there's no fixed price, but you're expected to tip your guide based on how much you decide it's worth. I've gone on these kinds of tours in other cities, and it's often a really fun way to get to know a new place in just a short period of time, no big commitment, and you can pay what you will. You choose what it's worth to you, and that's how much you tip the guide. Well, this is Side Hustle School, my name is Chris Guillebeau, and on the show, we're all about dissecting little businesses or little income generating projects, let's not even call them businesses sometimes, just little projects that people start to make some extra money, perhaps create some savings or an asset or otherwise some security for themselves, even as they continue to work a regular job. That's what our whole mission is here on the show, empowerment with education through storytelling.
So you'll never guess what today's story is about. Well, it's actually about free walking tours. I know, what a shocker. We're calling it Hit the Streets with these Chicago walking tours, and specifically, we're going to look at how a trip to South America inspired a pet supplies manager to launch his own free walking tour company. When I say free, of course, he's making money from it, so I'll tell you how much and how he makes it happen right after this quick shout out to our sponsor.
Jeff Michaels has been the manager of a pet care business for a large grocery cooperative. He's also dabbled in real estate with two rental properties, including one he manages himself. A few years back, Jeff and his wife had an experience while traveling that ended up turning into an accidental side hustle. On an extended trip through South America, they stumbled upon a free city walking tour in Santiago, Chile. They were skeptical at first.
How good could a free tour be? But they decided to try it out, and they ended up enjoying it so much that they sought out similar tours in every city they visited. While on a tour in Ecuador, Jeff's idea sprouted legs and took a walk of its own. He thought that implementing this model in his hometown of Chicago might have a walking chance. He did some research and discovered this model had a low barrier to entry.
It was an easy sell. Who wouldn't want a free walking tour? Jeff got home and got to work. He found someone to build his website on Upwork. He spent $500 to get a custom theme and integration with reservation software.
He put an ad on Craigslist looking for tour guides, and then interviewed a dozen applicants at Starbucks for two straight days. He built a team of guides that had a mix of experience, were likeable, and whose schedules would collectively allow him to build a calendar that offered tours seven days a week. He didn't want to find himself between a walk and a hard place. Leading up to the launch of free Chicago walking tours, Jeff caught a break when a popular neighborhood news publication wrote about it two days before the official opening. This generated much needed buzz about his new biz.
He then spent an entire weekend passing out brochures to every hotel and hostel in the area. Jeff racked up more steps and his pedometer knew what to do with, but said it was hard to know the return on investment because there was no way to track it. He didn't use coupon codes or anything else that separated signups from one source versus any other. Still, once his site was published, people began signing up. He remembers looking at his wife and thinking, "Huh, we've got guests." And then he went back to work because, after all, he had to produce those tours.
So how do you actually make money on a free tour? If you're thinking, "Well, the tours aren't really free," you're onto something. The two-hour long tours operate on a pay-what-you-want model. He asks that the guests leave a gratuity for what they thought the tour was worth. The gratuity goes to the guides, and Jeff makes money by charging the guides between two to three dollars per guest.
He averages 18 guests per tour and runs 15 tours per week during the high season. He also offers private walking tours for those who can't attend a scheduled tour or who have a large group or just prefer to have their own guide. Those private tours cost $150 and are catered to the needs of the individual or group. Jeff has found this free business model to be more beneficial than tours that charge per person. However, he stressed a few tips and best practices.
First, the need to maintain a five-star rating and grow your reviews is critical. Just like he was skeptical on his first walking tour, some people question his service's legitimacy because it advertises as free. The consistently high ratings and reviews act as assurance to other guests. On the other hand, he says publishing his tours on free event sites like Eventbrite was unsuccessful. It just resulted in him getting a lot of spam, so he now stays away from those.
Since its creation, free Chicago walking tours went from nothing to being a five-star trip adviser tour company with hundreds of reviews. He's also received a certificate of excellence from TripAdvisor. So far, he and his guides have led more than 15,000 guests on the tours, and it's bringing in more than $2,500 a month in extra income. It's not a ton of money, but at this point, the business is low maintenance. Not completely passive income, but close.
Jeff also coordinates with other tour companies to accommodate guests that can't take a tour with him. Going forward, he'd like to expand his operations to include additional cities in the Midwest. He supplements his day job income with the private tours and hopes to be running even more next year. Jeff traces this side hustle success back to his decision to walk the line. All right, what a fun project.
Thank you so much, Jeff. Appreciate you sharing that with our community. Next time I'm in Chicago, perhaps I will come along for one of those free walking tours. And yes, I will pay up, assuming I find value in it, which I'm sure I will. And as I was working on this, I was thinking back about my experience in Sydney on that walking tour, which I think is probably the most memorable one I've had.
And I remember some interesting psychology and positioning that the guy used to basically increase the average tip size or the average gratuity. I don't remember exactly what he did, but I remember as we walked through the tour, I think at some point he kind of mentioned what some of the paid tours would have cost. And those tours cost a lot more than I was expecting. And so then when I heard that the paid tours were, I don't know, something like $40 or $50, it took me from thinking, oh, I'm going to spend $5 or I'm going to give him $10 if I really like it up to saying, oh, I should probably give him $15 and then, oh, I only have a 20. I don't have a 10 and a five.
So here, here's 20 bucks. And as I walked away, I thought that's really smart because whenever you do something like pay what you will, you always run into that problem of people not knowing what to pay. So it really helps to give them an anchor point. Otherwise you run the risk of a lot of people paying a couple bucks or $5 or whatever the case may be, but not quite what you need for it to be sustainable. And then also, we don't have time to get into it now, but I don't think that a free walking tour is the only way to run it.
Like we've also featured a couple of people doing paid tours. I was thinking specifically of Alexandra in San Francisco, episode 158, the urban hiker climbs to steep success. She's actually running paid tours. So for her, that model works much better. It really depends on what city you're in, who the target market is, what your experience is, what your goal is for the business and so on.
So there's lots of different factors in that choice of doing a free tour versus a paid model. But clearly in this case, Jeff made the right choice, so good for him. And listeners, as always, inspiration is good, but inspiration with action is better. I hope you enjoyed this episode. If you want to check out the show notes and perhaps learn more about the free Chicago walking tours, come to sidehustleschool.com/643.
That is for episode 643. Much more is on the way, including a new episode tomorrow. Brand new day, brand new episode. That's how it works. I hope you'll join me for it.
My name is Chris Guillebeau, and this is Side Hustle School.
