Rack Rate vs Nett Rate Explained
A rack rate is the published, full price a supplier lists before any trade discount is applied. A nett rate, often called an STO rate (STO is generally understood to mean “sell to operator”, though the term is used inconsistently across the industry) is the discounted price a tour operator actually pays once that trade discount applies. The gap between the two is where your margin comes from.
If a lodge or supplier has ever sent you a rate sheet with two sets of numbers and no explanation, this is why. Confusing the two, or using the wrong one in a client quote, is one of the easiest ways to under-quote a booking or misjudge what you're actually earning on it.
What is a rack rate?
The rack rate is the supplier's standard, publicly listed price, the same rate a guest booking directly would be quoted. It's typically commissionable, meaning a travel agent selling at the rack rate can earn a percentage on top as commission.
What is a nett rate, or STO rate?
A nett or STO rate is the discounted, non-commissionable price offered specifically to tour operators and DMCs, in exchange for bringing the supplier business directly rather than requiring them to pay commission on a booking. Instead of commission, the operator's margin is built into the discount itself.
Suppliers structure this differently, but it's common for the discount to scale with how much business an operator brings. One real example: a Cape Town guesthouse's published STO terms tier the discount at 10% off rack for 1 to 5 bed nights a month, 15% for 6 to 9, and 20% for 10 or more. Treat this as illustrative of the pattern rather than a fixed industry rate, every supplier sets its own tiers.
Why the difference matters for your quotes
Mixing up rack and nett rates causes two specific problems. Quote a client using the rack rate when you're actually paying nett, and you've quietly given away your entire margin. Try to add commission on top of a nett rate booking, and you're double-dipping on a rate that was already discounted instead of commissionable, which is the kind of error that damages a supplier relationship if it's spotted.
The two rate types exist for the same purpose (getting suppliers business through operators rather than direct bookings), they're just structured differently. Knowing which one you're working from, for every supplier, every season, isn't optional.
Where this gets missed when rates live in a spreadsheet
This is exactly the kind of manual reconciliation that goes wrong in a spreadsheet, one column for rack, one for nett, and nothing stopping the wrong one being pulled into a quote. We've written about where spreadsheets stop working for supplier rates more broadly, the RACK/nett mix-up is one of the most common specific failure points within that larger problem.
How WildPlanner keeps RACK and STO rates straight
When a source rate sheet lists both a RACK and an STO rate for the same room and season, WildPlanner merges them into one line item and works out the discount percentage automatically on import. That's the calculation a spreadsheet leaves entirely up to you, done once, correctly, rather than re-checked by hand every time you quote.
Frequently asked questions
What does STO stand for in travel?
It's generally understood as “sell to operator”, though usage varies across suppliers and the acronym isn't applied consistently industry-wide. What matters more than the letters is the structure: nett, non-commissionable, and usually discounted off the rack rate.
Is a nett rate the same as an STO rate?
In practice, yes, they describe the same thing: a discounted, non-commissionable trade rate offered to operators instead of the commissionable public rack rate. Different suppliers and regions favour one term over the other.
Can I still earn commission on a nett rate booking?
No. The nett or STO rate already has your margin built into the discount, so it isn't commissionable on top. If you're being offered commission, you're most likely working from the rack rate instead.
Why do rack rates and nett rates differ so much?
Because they're pricing two different relationships. Rack is the guest-facing, direct-booking price. Nett/STO reflects a trade relationship where the supplier is willing to discount in exchange for volume and not paying commission separately.
