For advisors and DMCs
Net rates and commission: how a DMC quote actually pays you
A net rate is the supplier price with no advisor remuneration built in, so the advisor adds a markup to reach the client price. A commissionable rate is quoted at the client-facing price, with the advisor paid a percentage back after travel. Neither is inherently better, but comparing a net quote against a commissionable one without adjusting will always flatter the net.
The same trip, two prices, both correct
A DMC quoting 10,000 net and a DMC quoting 11,750 commissionable at 15% are describing an almost identical commercial outcome. The first leaves the advisor to add their own margin; the second has the margin already inside the number and returns it afterwards.
Read as raw figures, the first looks 15% cheaper. It is not. This is the single most common error when comparing DMC quotes, and it is why the pricing basis has to be established before the prices are worth reading at all.
Net rates
A net rate is what the DMC needs to receive. The advisor marks it up by whatever the market and the relationship support, and the client sees only the final figure. The advisor sets their own margin, and it is invisible to the client.
The trade-off is exposure. Because the margin is a decision rather than a fixed percentage, it moves with competitive pressure, and an advisor discounting to win business is discounting their own income directly.
Commissionable rates
A commissionable rate is quoted at the price the client will pay. The advisor collects the full amount or the client pays the supplier directly, and commission is remitted after travel, typically 10% to 15% in ground services.
The margin is predictable and needs no calculation per quote. The costs are cash flow, since payment arrives after travel rather than at booking, and collection risk, since an unpaid commission is chased after the trip is already delivered.
Markup and commission are the same margin, differently placed
Markup is added on top of a net rate; commission is taken out of a gross rate. A 15% commission on 11,750 is 1,762, while a 15% markup on 10,000 net is 1,500 on a client price of 11,500. The percentages are applied to different bases, so equal percentages are not equal money.
Advisors comparing their own remuneration across suppliers should convert both to cash on the specific trip rather than compare percentages, which is the step most often skipped.
What to establish before comparing
Ask every DMC to state the basis explicitly rather than inferring it from the number. A quote that does not say is the one most likely to be misread, and the misreading is almost always in the DMC favour.
- Net or commissionable, stated on the quote rather than assumed
- If commissionable, the exact percentage and which components carry it
- Whether taxes and service charges are inside or outside the quoted figure
- When commission is paid, and on what trigger
- Whether the client will be shown any part of this, which some suppliers stipulate
Frequently asked questions
What is the difference between net rates and commission in the travel industry?
A net rate is the supplier price with no advisor remuneration included, so the advisor adds a markup before quoting the client. A commissionable rate is quoted at the client-facing price and the supplier pays the advisor a percentage after travel. Both can produce the same margin; the difference is where it sits and when it is received.
What is the difference between DMC markup and commission?
Markup is added by the advisor on top of a net rate and is invisible to the client. Commission is paid by the DMC out of a gross rate after travel. Because the two percentages apply to different bases, a 15% markup and 15% commission on the same trip do not produce the same amount of money.
Which is better for a travel advisor, net or commissionable rates?
Net rates give control over margin and payment at the time of booking, but expose the advisor to competitive discounting of their own income. Commissionable rates give predictable margin with no per-quote calculation, at the cost of waiting until after travel to be paid. Advisors handling high-value tailor-made trips more often prefer net.
How do I compare a net quote with a commissionable quote?
Convert both to the price the client would pay and the cash the advisor would keep. Add your intended markup to the net quote to get its client price, then compare that against the commissionable quote and set your commission against your markup. Comparing the headline figures directly always favours the net quote.
Do DMCs have to say whether a rate is net or commissionable?
There is no universal requirement, and quotes that omit it are common. Because the omission changes the apparent price by ten to fifteen per cent, it is worth asking for the basis in the original request rather than after the proposals arrive, so every response answers on the same footing.