Pricing & rates · Travelers + trade
Markup / margin
Also called markup, margin, gross margin
The short answerMarkup is profit as a share of cost; margin is profit as a share of the selling price. Same profit, different percentages.
What it means
Markup and margin both describe profit, measured against different numbers. Markup is the profit divided by the cost (the net rate). Margin is the profit divided by the selling price. The two are often confused, which leads to prices set lower than intended.
Why it matters
Pricing rules in booking systems are usually set as one or the other. Mixing them up on a large booking volume quietly changes your profit.
Example
Example only: net rate 100, selling price 125. Profit 25 = a 25% markup (25 / 100) but a 20% margin (25 / 125).
Related terms
- Net rateThe price a rental company charges a reseller before the reseller adds its own margin.
- Gross rateA price that already includes the seller's commission; the seller keeps its share and passes the rest to the rental company.
- CommissionA percentage of the rental price paid to the agent or partner who made the sale.
Also related Repricing, Yield management, Retail price