CWT is rolling out a subscription-fee model after about a year of piloting the model with a select group of clients, the travel management company announced.
The pricing model sets a monthly fee for clients that covers all products and services procured from CWT, based on forecasted transaction volume and additional products and services needed. The monthly fee can be revised if clients need to add or subtract services or adjust volume expectations.
CWT VP of finance and head of global pricing Brady Jensen said the model was developed from interviews with CWT clients, former clients and consultants to identify what they thought of TMC pricing in general. The key pain points they identified, according to Jensen, were that pricing was complicated, not transparent and difficult to budget, so the model was designed to address those concerns, he said.
It also will be appealing to clients who are restarting travel programs and are having difficulty budgeting, he said.
“[The fee] is really tailored to that particular client,” Jensen said. “”It not only considers the countries in their scope and the particular services that the client is enjoying today, but if they add countries to the program over the years, it can be added to the volume tiers, and we don’t have to reprice and run through another contract schedule with a separate fee schedule.”
The pilot clients were mostly “quite large” travel programs operating in multiple countries, he said. They also were largely US-based, though CWT is offering the model on a global basis with the exception of countries that are hindered by local restrictions.
CWT reported “overwhelmingly positive” feedback from the pilot clients. One key benefit highlighted was easing the administrative burden on both sides, as having a central invoice in one country precluded the need to cobble together data country by country for auditing, Jensen said.
“It reduces the administrative hassle quite significantly,” Heather Allegrina, global travel manager for software company and pilot company ServiceNow, said in a statement. “As a high-growth, global company, it gives us the flexibility and reliability to forecast and measure quickly and easily our travel investment to support our scaling strategy.”
Jensen said CWT hasn’t set a specific goal in how many companies it expects to adopt the subscription-fee model, acknowledging it’s “not a perfect fit for every client.”
Transactional pricing models have been the dominant model in TMC pricing. In research from BTN sibling publication The Beat conducted prior to the pandemic, more than 80 percent of buyers said they compensated their TMC through a per-transaction fee, compared with 8 percent that had monthly, quarterly or annual management fees.