Card rate, net rate and commission: how OOH pricing really works

A client asks the price of a hoarding. There are three correct answers, and which one you give depends on who they are. This is not sharp practice — it is how media has been sold for decades — but it is the source of most billing arguments in out-of-home, because two people say “the rate” and mean different numbers.

The three prices

Card rate is the published price. It appears on your rate card, it anchors the negotiation, and almost nobody pays it.

Net rate — also called the best rate, or the deal rate — is what you actually accept. In most Indian markets this lands somewhere between 50% and 75% of card, and varies by client, season and how long the site has been empty.

What the advertiser pays is a third number again, because if an agency sits in the middle it adds its own margin, and because printing, mounting and tax are stacked on top of the display rent.

An owner who confuses the second and third numbers will believe his agency is underpaying him. An agency that confuses them will quote a client a figure it cannot deliver.

Why keep a card rate nobody pays?

It looks like theatre and it is not. A card rate does three real jobs:

1. It sets the ceiling. Without one, every negotiation starts from whatever the client says first.
2. It makes discounting measurable. “We closed at 62% of card” is a sentence a business can manage. “We got a good price” is not.
3. It keeps your salesmen consistent. Two people quoting the same face at different prices is how you lose a client who compares notes.

The failure mode is a card rate set so far above reality that everyone ignores it, at which point you have lost all three benefits. If nothing closes above 55% of card, the card rate is fiction — lower it and let the discount mean something again.

Track realisation — actual rate as a percentage of card — per site and per salesman. It is one of the most informative numbers in the business and almost nobody calculates it, largely because it needs the card rate and the agreed rate to sit on the same record, which is exactly what carrying both on the site itself is for.

Agency commission, and the confusion inside it

When an agency books space on behalf of an advertiser, it is paid a commission. In Indian media practice this has traditionally been around 15%, though it is negotiated now rather than assumed, and large advertisers often work on a fee instead.

The confusion is not the percentage. It is which number the percentage applies to, and there are two conventions in daily use:

• Commission out of the rate. The owner quotes ₹1,00,000, the agency remits ₹85,000 and keeps ₹15,000. The advertiser pays ₹1,00,000. The commission is a discount to the agency.
• Commission on top. The owner’s net is ₹1,00,000, and the agency bills the advertiser ₹1,15,000 or whatever its margin requires.

These produce different money for everyone, and both are described in conversation as “fifteen percent”. Write down which one you mean, on the proposal, in words. The number of disputes this one habit prevents is out of all proportion to the effort.

If you are the owner paying commission to an agent, remember TDS applies to that commission and you are the one who has to deduct it. Handling it at payment time is straightforward; discovering it at year end is not.

Printing, mounting and the rest

Display rent is the headline, but it is rarely the whole bill:

• Printing — flex or vinyl, charged per square foot. This is why the exact dimensions of the site matter, and why recording them properly saves arguments.
• Mounting and dismounting — labour per site, higher for gantries and anything needing a crane or night work.
• Lighting — where the site is lit and the meter is yours.

Two decisions worth making deliberately:

Quote them as separate lines, always. An owner who folds printing into the rate looks more expensive than one who lists it, and cannot explain why when challenged.

Decide whether printing is a pass-through or a margin. Both are legitimate. What causes trouble is being unclear, then being asked for the printer’s invoice by a client who assumed pass-through.

Many advertisers prefer to print their own material and send it to you. That should be an explicit option on the quotation with the printing line at zero, not an awkward conversation afterwards.

Tax, briefly and carefully

Outdoor advertising services in India generally attract GST at 18%. There is a lower rate for sale of space in print media, which is a different thing and does not apply to hoardings — a genuine source of confusion, since both are “selling advertising space”.

Two practical points rather than tax advice:

• Most advertisers are claiming input credit, so GST is usually a cash-flow question for them rather than a cost. It is still a large number on the invoice and should never be a surprise at the end.
• State whether your quoted rates are inclusive or exclusive of GST. On the proposal. In writing. An 18% ambiguity on a ₹6,00,000 campaign is a ₹1,08,000 argument.

Confirm your own position with your accountant. Rates and classifications change, and a blog post is the wrong place to take that from.

Pricing a period that is not a month

Out-of-home is quoted monthly by convention, and campaigns refuse to run in neat months.

The common approaches, with their consequences:

• Round up to the month. Simple, and clients on short campaigns resist it.
• Pro-rate on days. Fair and easy to explain — monthly rate divided by 30, times the days. This is what most owners settle on.
• Quote a genuine daily rate. Avoid this. Once a daily number exists, every client applies it to a full month and asks why the total is higher.

Whichever you use, apply it consistently. The client who got pro-rata last quarter will expect it next quarter.

Set a minimum booking period and put it on the rate card. Seven or fifteen days is common. The mounting cost of a three-day campaign is identical to a thirty-day one, and without a floor you will occasionally do work for less than it costs.

Discounts that work, and one that does not

Discounts that build the business:

• Duration — a genuinely lower monthly rate for three months or more. It reduces vacancy, which is the largest cost you have.
• Volume across sites — rewards taking your weaker inventory alongside the good sites.
• Advance payment — a small discount for money up front is usually cheaper than sixty days of chasing.

The one to resist is the empty-site panic discount, which teaches clients to wait. If a client learns that your rate falls in the last week of the month, he will book in the last week of every month from then on. Sell the gap before it opens, not after.

What to put on the proposal

Everything above, made explicit, so it survives contact with a procurement department:

• Site name, exact dimensions, format, lit or unlit
• Card rate and the offered rate, both shown
• Period, with the pro-rata basis stated
• Printing and mounting as separate lines, or explicitly marked client-supplied
• Whether commission is included in or added to the rate
• GST treatment, inclusive or exclusive, stated in words
• What the client gets as proof, and when

A quotation carrying all of this is harder to argue with, and it is the same document that becomes the invoice later — which is exactly why the two should come from the same figures rather than being typed twice.

In Sazinga AdBoard each site carries its card rate and its negotiated rate, printing and mounting sit as their own line items, GST is applied on the campaign, and the invoice is raised from the booking rather than re-entered. It is the same principle applied across an outdoor media business: the document you send and the document you bill from should be two views of one record, not two acts of typing.