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

The question lands about four minutes into a first call, in the tone of someone confirming a formality. So what commission do you pay?

None.

That is not a refusal, and it is not the opening of a negotiation. It is a description of 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 keeps 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 the ground cost of operating the trip, which is the hotels, the licensed guides, the vehicles, the entrance fees, the permits and the people who meet the group at the airport. You add what you add. Then you sell it under your own name, at a price we never see and have no view on.

So "none" is not us holding something back. There is no retail price for us to take a percentage of, because we never set one. 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 for a moment. 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 you will rarely see a DMC publish rates. It is not secrecy. A published number would have 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 ends up paying for the padding.

What the trade actually costs you

Put plain numbers on it, purely as arithmetic. Say the ground cost 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. There is no figure of ours that a traveller can find and hold up against yours, we do not approach your client, and we have no opinion on your markup.

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 exposure inside it. Quote a client in euros in September for a trip that operates in March and you have taken a currency position, whether or not you meant to.

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

Where commissionable rates still turn up

They have not vanished. A wholesaler buying from us and reselling into its own agent network will often 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 looks like it does. Three things move it, and all three are quick to ask.

Is tax inside or outside? Both countries levy VAT on tourism services and the applicable rate moves with policy, so the thing to pin down is not the percentage but which side of the line it sits on. 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? Everybody answers this one too smoothly, ourselves included, so here is ours split into the two halves it actually has. We quote in euros or US dollars and we contract our suppliers in baht and dong, so the movement between our quote and our supplier payments is ours to absorb, and our conditions give us no clause that would let us add a currency surcharge to a booking we have already confirmed. The other half runs the other way. Those same conditions settle in US dollars unless we agree something else in writing, and they put bank transfer charges and conversion costs on your side of the line. Both halves are true at the same time. Ask any operator to split it like that, because "we handle the currency" is a sentence that can honestly mean either one.

How many invoices arrive? A programme crossing two countries can settle as a single invoice or as a stack of supplier bills. That stops being an administrative detail the moment your finance team has to reconcile it against one client payment. How a booking settles, from deposit to reconciliation sets out the payment side in full.

How we do it

Net rates to registered trade partners, quoted per brief and never off a rate sheet, in euros or US dollars, excluding VAT, on one invoice per programme however many suppliers sit behind it. Registering costs nothing and is gated on nothing.

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

If you want to see the shape of it before committing to anything, send a real brief instead of an introduction. What makes a brief complete enough to cost properly is the fastest way to get a number worth comparing.

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.