Markup pricing

Markup pricing is a pricing method in which a business adds a fixed percentage or amount to the cost of a product or service before selling.

This approach is used by travel intermediaries like online travel agencies (OTAs), bed banks, destination management companies (DMCs), or tour operators working on a merchant model. The middlemen purchase hotel rooms, airfares, and other products from a supplier, apply a markup, and sell them to customers—either end travelers or businesses—profiting from the price difference.

Markup pricing plays an important role in revenue management, as it allows flexibility in adjusting rates based on demand, seasonality, or competitor pricing. However, when applied without considering market conditions, it can result in lost revenue or lower competitiveness.