If you’re shopping around for a travel management company (TMC) for your small or mid-size company to partner with, you’ve likely come across one of the biggest questions decision-makers have during the TMC shopping process: What TMC pricing model is right for my company?
Here’s everything you need to know about the various travel management company pricing model options and how to decide what’s best for your company’s needs.
The Top TMC Pricing Model Options
Before we start weighing the pros and cons of the various TMC pricing model options to help you decide which is best for your company, let’s review the top TMC pricing model options that you may have come across in your research.
A subscription travel management pricing model is exactly what it sounds like. You pay a flat, set fee on a regular basis, giving you and your employees access to the TMC’s services. The fee may differ according to how many employees you have and what services you need.
Sometimes, a subscription-based TMC pricing model is also referred to as a monthly management model.
A transaction fee is a little less straightforward, in that you’re paying for each of your transactions and each use of the TMC’s services. The fee isn’t set and will differ according to what services you use.
The flat fee differs just slightly from the transaction fee in that you pay a flat fee for an array of combined services, rather than paying for each transaction individually. Think of it as buying a bundled deal.
Which TMC Pricing Model is Right for Me?
So which of the above three options is the best fit for your company? If you’ve decided a TMC’s benefits are worth your investment, then here are the pros and cons of each TMC pricing model.
Subscription TMC pricing model: Pros and cons
The subscription TMC pricing model is hardly new, even if it’s received a fair amount of press in the business travel world as of late, with experts debating the pros and cons of travel management companies moving to subscription-based services only. However, TMC monthly management fees have been around for decades, even if they weren’t technically called a “subscription.”
So what are the benefits of a subscription-based TMC pricing model?
For starters, the subscription model is very easy to budget for. Your accounting team and travel management team will always know exactly how much the company’s travel services will cost each month, barring any out-of-the-ordinary expenses. Additionally, with a subscription fee, you won’t be forced to pay for extra admin or transaction fees, as you might see with other TMC pricing models.
Beyond this, with the subscription model, you may find that your subscription includes certain services that you might not feel the need to spring for otherwise. These services might include reporting and oversight that could increase corporate responsibility and improve duty of care.
The downsides to the subscription-based TMC pricing model, though, are the same as you might see when purchasing a subscription to anything. If you find that you need one-off travel services or incur random travel expenses unexpectedly, your needs might not be covered under the limited scope of a subscription model. You’ll also want to look at what all the subscription covers, as well as how many employees. Consider whether or not you’ll be getting your money’s worth and/or using the subscription’s services enough to justify the cost. A subscription that covers frequent international trips and complex bookings for a large team might not be suitable for a company with only a handful of frequent travelers that mostly travel regionally.
Transaction fee TMC pricing model: Pros and cons
The transaction fee TMC pricing model is a nice fit if you know exactly what kind of TMC services you need or if you don’t necessarily need them all that often. If you already have a firm grasp on your travel spending and reporting. You may find that you can ensure all your company’s needs are easily met by picking and choosing which services you require, a la carte, rather than relying on a subscription.
Additionally, with the transaction fee model, it’s somewhat easier to shop around and compare TMCs. You can look at individual services and compare prices for each versus weighing more complex subscription services against one another.
The con of the transaction fee TMC pricing model, however, is the lack of that easy convenience and consistent monthly, quarterly or annual price that a subscription model offers.
Flat fee TMC pricing model: Pros and cons
Since the flat fee model is a bit like a combination of the transaction fee model and the subscription model. It might make a good fit if you’re just not sure which of the two is right for you. Maybe you don’t need the complexities or comprehensive oversight of a subscription service, but you do know that you want several different services and you’d rather not pay for them all individually. In this way, the flat fee model can provide the best of both worlds, but it also comes with the downsides of both worlds, too.
Understanding Your TMC Needs is the First Step to Picking Your Perfect Partner
Once you’ve identified which TMC pricing model would work best for your company’s travel needs, you’ll be well on your way to partnering with the perfect provider for your team.
Need more educational resources to help you make the best business travel decisions for your team? Whether you’re a Travel Manager, executive, business owner or any member of a corporate travel team, you’ll find a wealth of useful educational resources in the JTB Business Travel Resource Center.
Know exactly what services you need and are ready to partner with a trusted TMC? Get in touch today to learn more about JTB Business Travel’s suite of comprehensive corporate travel services.