Does a DMC Pay Commission? No, and That Changes Who Sets Your Price

Say it is your first call with a new ground handler. Dates agreed, group size agreed, and you ask the question that sounds like a formality: what commission do you pay?

None.

That is not a refusal, and I am not opening a negotiation. I am describing which way the money moves, and once you can see it, most of your pricing decisions follow on their own.

Picture two people selling on the same street. One sits at an airline ticket desk. The airline sets the fare, sells the seat, and pays back a slice for having made the sale. The other is a greengrocer. She buys a crate of tomatoes at whatever the market charged her that morning, carries it back, and then decides on her own what a tomato costs in her shop. Nobody pays the greengrocer a percentage. Her margin is not handed to her. It is the thing she makes.

A DMC sells tomatoes.

The two directions money can travel

On commission, the supplier owns the retail price. An airline, a hotel chain, a cruise line: each publishes a price the public can see, sells at that price, and returns an agreed percentage to whoever brought the sale in. Somebody else's pricing decision sets what you earn. Your job is volume.

Net reverses the arrow. We quote you net rates, which are trade buying prices for the ground services: the hotels, the licensed guides, the vehicles, the entrance fees, the permits and the people who meet the group at the airport. You add your margin. Then you sell the trip under your own name, at a price we never see and have no view on.

So when I say none, I am not holding anything back. There is no published price for a commission to come out of. How a quote is built, line by line covers the anatomy of the document. This is about which model the document is written in.

Why nobody can chalk a price for your February

Commission needs a public price, and a public price needs a fixed thing to hang on. Seat 14C on Thursday is a fixed thing. Fourteen days across Thailand and Vietnam for nine people in February is not.

Go from nine travellers to fourteen and the vehicle changes, which changes the driver, which changes the cost per head. Move the same trip from February to June and the hotel line moves further than most people expect. Ask for a German-speaking guide in Hue and the list of people who can do it gets very short, very quickly.

Back to the greengrocer. She can chalk a number on a board because a tomato on Tuesday is the same object as a tomato on Wednesday. Your February group is not an object. It is a stack of decisions, and several of them have not been made yet.

That is why we publish no public price for a programme, and why you will rarely see any DMC publish rates. It is not secrecy. A published number has to be padded wide enough to survive the worst version of every one of those variables, and the partner marking it up is the one who pays for the padding.

What the trade actually costs you

Put plain numbers on it, purely as arithmetic. Say the net price of a programme comes to 100. On a ten-point commission you receive 10, and the traveller pays whatever the supplier decided the trip was worth. On net you receive 100 as a cost, and you choose the number that goes after it. Sell at 120 and you made 20. Sell at 108 and you made 8. Nobody stopped you doing either, and nobody will.

That is the gain, and it is a real one. Take 20 on the group that needed three rounds of changes, and 8 on the repeat client you want to keep. On commission, both would have earned you the same 10. We have no opinion on your markup, and the client relationship stays yours.

The cost is that nobody is deciding it for you. On commission your margin arrives pre-agreed, and you can plan around it. On net you carry the pricing judgement and the risk inside it. Quote a client in euros in September for a trip that runs in March, and you have taken a currency position, whether you meant to or not.

For most agencies that is a fair trade. An agency selling small volumes of high-value private travel does far better owning its own margin. For a few, it is a bad one: an agency built on thin margins at high volume, with no appetite for holding a price still for six months, may find a wholesaler's commissionable rate easier to live with. That is a legitimate commercial choice, not a lesser one.

Where commissionable rates still turn up

They have not vanished. A wholesaler that buys net and resells to its own agent network may publish a gross rate downstream, because by that point there is a product with a price on it. Some hotel-only bookings, made direct instead of inside a programme, still run on the old basis.

None of that changes the layer you are dealing with. It changes how many layers sit between you and the ground, and each one has to eat from the same trip. Who does what across the chain is the fuller version of that argument.

Three questions that decide what a net number is worth

A net figure on its own tells you less than it seems. Three things move it, and all three are quick to settle.

Is tax inside or outside? Both countries levy VAT on tourism services, and the rate moves with policy, so pin down which side of the line the tax sits on, not the percentage. A quote that excludes tax and one that includes it are not close to being the same quote. The gap can swallow most of a cautious agency's margin.

Which currency, and who carries which half? Currency risk on a net rate has two halves. The first is the movement between the day of the quote and the day the operator pays its suppliers. The second is the movement between the currency you sell in and the currency on your invoice, plus the bank charges on each transfer. Sell in euros against an invoice in US dollars, for example, and that second half is yours. A good answer names both halves and says who carries each, because "we handle the currency" can honestly mean either one.

How many invoices arrive? The count stops being an administrative detail the moment your finance team has to match every invoice against one client payment. With us, a programme across both countries is invoiced country by country: each leg is contracted by that country's company, Thai or Vietnamese, and invoiced by it. How a booking settles, from deposit to reconciliation sets out the payment side in full.

How we do it

Net rates go to registered trade partners, quoted per brief and never off a rate sheet. Registering is free, with no minimum volume and no exclusivity. Each quotation sets out the currency, tax treatment and invoicing for each leg, along with which documents we prepare and who contacts your travellers on tour.

Your margin is not something I grant you. It is not something I can take back.

If you want to see the shape of it before committing to anything, send me a real brief instead of an introduction. A complete brief is the fastest route to a comparable number, and our briefing guide shows what goes in one.

After that the pricing decision is yours, the way it is the greengrocer's. Nobody hands her a percentage. Nobody tells her what a tomato is worth on her street either. Some mornings that is the harder job. It is also the whole of the business.