THE NAKED TRUTH BEHIND MANAGEMENT FEE-BASED vs COMMISSION BASED MODEL
Q: Are clients savvy and understand what DMCs are?
Business clients do understand what DMCs are and how our services differ from those of business to consumer travel agencies. When business clients contact us, they’re looking for the kind of in-depth knowledge of the chosen destination which only an incoming DMC can offer. I’m not positive I can say the same for individual clients whose occupation is not in the travel industry; their initial understanding of a DMC and its services tend to be more limited based on my experience to date.
Q: Are DMC’s competitors to event and marketing agencies?
DMCs, in general, offer a vast variety of services including the organization and logistics for events in destinations, so by virtue of that, we become a competitor to event agencies. Marketing though is a bit different, and unless the DMC has a subdivision oriented towards offering marketing services to their clients, DMCs cannot be considered as direct competitors to them.
Q: Do DMC’s provide better local access and pricing?
DMCs definitely have a better knowledge of, and wider network in the destination they provide services in. Therefore clients should and can rely on the advice of experienced DMC professionals from their region of interest. Since DMCs operate locally and have an established network of suppliers they regularly do business with, it is understandable that DMCs are able to negotiate better pricing and terms.
Q: What do you think about the rise in budget transparency?
In the past, we have worked with the partners based on net rates plus an agreed markup rate. I personally believe this is the most transparent way of doing business and that business partners value its openness. Budget transparency is crucial for clients to understand how market prices can fluctuate through a certain period of time and their impact on overall costs.
Q: What do you think about this statement: We should be charging for what we do?
We are all in business to make money and charge for what we do, no matter what type of pricing model we apply, with any client. We should, of course, charge for the services we deliver for that is our main reason for existence.
Q: Do you charge a fee for site inspections?
It really depends from client to client and their preference, but most of our inspection trips (in destination) are usually covered by us.