Commission
A supplier, such as a hotel, an airline, an insurer or a cruise line, pays you a share of its price for bringing it a booking. The customer pays the supplier's public price, directly or through you. Your earning is set by the supplier's terms, is often paid after the travel, and can be changed or withdrawn by the supplier.
Markup
You buy at a net rate, from a hotel, a DMC or a transporter, and sell to the customer at your own price. The difference on each line is your markup, as a fixed amount or a percentage, and it is yours to decide. You carry more risk, because you pay the suppliers and own the booking, and more control, because the price is yours.
Side by side
| Commission | Markup | |
|---|---|---|
| Who pays you | The supplier, out of their price | The customer, as part of your price |
| Who sets it | The supplier, in their agreement with you | You, line by line |
| When you get it | Often after the stay or the travel, on the supplier's terms | When the customer pays you |
| What the customer sees | The supplier's public price | Your package price |
| How you bill | You sell at the supplier's price, or they bill the customer direct | You buy at your cost and sell the package in your own name |
| Risk | Low: you do not hold the booking's money | Yours: you pay suppliers, so a cancellation or a rate change lands on you |
A worked example
Made-up numbers for one hotel, to show the arithmetic. They are not suggested rates.
| Commission | Markup | |
|---|---|---|
| Hotel, 3 nights | Public rate ₹6,000 a night | Net rate ₹6,000 a night |
| Your terms | 10% from the hotel | ₹900 a night added by you |
| Customer pays | ₹18,000 | ₹20,700 |
| You earn | ₹1,800, when the hotel pays | ₹2,700, when the customer pays |
The amounts differ, and so does the kind of money. The commission depends on the hotel's terms and arrives later. The markup depends on a price the customer accepts, and arrives with their payment. In a real package the net rate is often below the public rate, which is where most of a package's margin comes from.
When each makes sense
- Commission suits single bookings in the supplier's name: a flight, an insurance policy, a cruise, a hotel the customer has already chosen.
- Markup suits packages you put together and sell in your name: hotels, cars, sightseeing and transfers as one trip at one price.
- Many agencies do both, and keep them apart in their books.
A note on GST
GST treats commission income and a package sold in your own name differently, and a package itself can be billed in more than one way. The 5% or 18% guide covers packages; confirm the rest with your CA before you invoice.
Markup in Triplli
Triplli is built for the markup side: each line of the estimate is your cost and your markup, as rupees or a percentage, typed by you. The total and your margin update as you type, and nothing is filled in for you, not even a default percentage. The customer's PDF shows your price and never your cost. See quotations in Triplli or the costing sheet.
