Net, gross and commissionable: the three prices that decide your margin

Ask ten agency owners what a net rate is and you will get three confident, incompatible answers. The confusion is not academic — it decides whether a booking earns you £30 or £95.

Three prices, three different relationships

The public price is what a consumer sees on the supplier's own website. It is the reference point your client will use, whether or not you want them to.

A commissionable rate is the public price with an agreed percentage returned to you after travel. It feels comfortable because there is no working capital involved, but the supplier controls the number. When they trim the programme from 10% to 7%, your margin falls and there is nothing to negotiate.

A net rate is the wholesale price with no commission inside it. You buy at that figure and decide what to sell it for. Your margin becomes the gap between the two, which you set per booking.

Why net pricing makes B2B work

Two things follow from that shift in control.

First, you can compete. If a client is comparing your quote against an OTA, a commissionable rate leaves you nowhere to go — the price is the price and your only lever is giving away commission. On a net rate you can shave your markup on the flight and hold it on the hotel, and still be ahead.

Second, you can price by service level. A complex multi-city itinerary for a corporate client is worth more of your time than a weekend in Lisbon, and net pricing lets you charge accordingly instead of earning the same percentage on both.

The four things that make a net rate worse than it looks

Exclusions. A rate that excludes city tax, resort fees or breakfast is not comparable to one that includes them. Normalise before you compare, or you will confidently choose the more expensive option.

Cancellation terms. Non-refundable and flexible rates are different products. A 6% saving that comes with a fully non-refundable policy is a risk transfer, not a discount.

Currency. Net rates are frequently contracted in the supplier's currency. Know whether conversion happens at quote or at book, and who carries the movement in between.

Parity obligations. Supplier contracts almost always prohibit displaying net figures publicly. This is a contractual requirement rather than a style preference, and it is why marking up before display has to be automatic rather than remembered.

How to set markup without thinking about it every time

Flat percentages are easy and wrong at both ends: they leave money behind on high-value bookings and price you out of cheap ones. Value bands work better — a higher percentage under £500, tapering above it — with overrides by destination where you know the competition is fierce.

The important part is that the rule lives in the system rather than in a consultant's judgement at 5pm on a Friday.

Should you abandon commission entirely?

No. Most agencies that do this well run both: direct commissionable contracts with the two or three properties where their volume genuinely earns preferential terms, and net supply for everything else. The mistake is not choosing commission — it is defaulting to it everywhere because that is how the desk has always worked.