Shopping for a travel management company (TMC) for your SME? You’ve likely come across several different TMC pricing models. One of these is the travel subscription pricing model. Is it the right fit for your company?
Travel management companies use three primary pricing models. There’s the travel subscription pricing model, the transaction fee model, and the flat fee model. These work pretty much as you’d expect. The travel subscription pricing model allows you to pay one set payment each month (or another frequency). Then, you get a set suite of services, just like any subscription. The transaction fee model charges you for a la carte services. The flat fee model charges you for a bundled mix of services.
If the straightforward nature of the travel subscription pricing model has caught your eye, here’s what you need to know.
What is the Travel Subscription Pricing Model?
The travel subscription pricing model is straightforward and easy to understand. It works just like any other subscription you might pay for. You pay a monthly, quarterly, or annual fee. Then, you receive a set number of benefits and services for that fee. You may get, for example, unlimited reporting and booking services. You might also get extra perks, like unlimited Traveler assistance.
Your cost for the subscription may differ according to how many people you have on the subscription using the travel services, as well as your general travel needs, such as how many trips your teams take per year. Likewise, your fee will differ according to the TMC you sign with.
The more you use the unlimited services within your subscription, the more value you get from the subscription. (Just like the more you watch Netflix, the more value you get from paying your monthly Netflix bill.)
The Benefits of the Travel Subscription Pricing Model
There are myriad benefits to partnering with a TMC that offers the travel subscription pricing model.
For one, the set monthly, quarterly, or annual fee makes it easy for you to know how much you’re spending for your TMC service. Additionally, as is the case with any subscription service, the reward is a lower upfront cost, regardless of the number of transactions covered. Thus, overall travel spend is typically reduced, and you’ll have a better handle on travel spend.
Furthermore, the subscription model can reduce all the time spent processing travel costs. This frees up accounting and finance teams for higher value-driven work.
Likewise, you may get certain features and perks with your subscription for free that you wouldn’t normally buy. These can make your Travelers’ experiences less stressful and more seamless. It will make the entire business travel process easier, more rewarding, and more productive for everyone.
The Downsides of the Travel Subscription Pricing Model
Of course, there are downsides to travel subscription pricing models, too.
For one, because it is a subscription, your services and benefits are limited to whatever it is that the subscription entails. You might not necessarily be able to call up your TMC and ask for services when needs arise unexpectedly. If you are able to do so, you may find that you incur a fee.
Additionally, you may not find that you use the travel subscription enough to get your full money’s worth. If your travel slows down or your team doesn’t have the same travel needs that it once did, you could fail to see a return on your investment. Likewise, if your team travels extensively in one part of the year and not in the rest of the year, you may find it frustrating or useless to pay for a full year’s subscription.
Accordingly, one of the factors standing in the way of the travel subscription pricing model’s broader adoption is world events. When the COVID-19 pandemic halted business travel for some time, it showed that the business travel industry, as well as the travel industry as a whole, can be somewhat volatile. A company doesn’t want to be stuck with a pricey subscription if they’re going to end up unable to use the majority of that subscription due to world events.
Finally, the subscription pricing model may be less suitable for larger corporations, as the model may make it difficult to deal with centrally billed costs if the program covers the company’s different (global) entities. The easiest solution for this is to share the cost of the subscription fee, much in the same way a company might share the cost of software licenses across the organization.
Who is the Travel Subscription Pricing Model Right for?
So, is the travel subscription pricing model right for you?
Generally, travel subscription pricing models are best for SMEs with a smaller number of Travelers. Likewise, it’s good for an SME with a number of Travelers who will use the same subscription services over and over again.
The travel subscription pricing model is also a nice option for those SMEs who do not have any Travel Manager or similar individuals on staff. The company might need to outsource all aspects of travel management, from duty of care to reporting and beyond. A subscription can ensure these tasks are covered without the need to hire a full-time staff member.
The travel subscription pricing model is not ideal, though, for companies with a large number of Travelers (so many that the subscription cannot accommodate all of them). It is also not ideal for companies with very complex travel needs. They may need more hands-on help from a Travel Manager.
Truth be told, not a lot of travel buyers have bought into the travel subscription pricing model. As Business Travel New Europe reported in early 2023, in a survey of European travel buyers, only 6% had decided to use a subscription pricing model. Nearly two-thirds said they were using the transaction fee model instead.
Unfortunately, as this report also found, this can be bad news for TMCs. They have found the transaction fee model to be less than ideally profitable. The subscription pricing model could be more beneficial and help TMCs, long-term, better benefit their clients.
Does Your SME Need Help with Travel Management?
Whether you’re looking for a full-on Travel Management Company to take over all elements of your SME’s business travel, or you just need a la carte options to fulfill particular travel needs as they arise, see what JTB Business Travel could do for you.
