trip gain

Fair Market Price

What is Fair Market Price?

Fair Market Price (FMP) is the price at which a product or service would sell in a competitive marketplace where both parties have equal knowledge and no pressure to complete the transaction. It reflects the true value based on current demand, supply, and conditions in the market.

In corporate travel and expense management, Fair Market Price plays a critical role in budgeting, policy enforcement, and vendor negotiations. Travel managers use FMP to ensure that bookings made by employees are cost-effective and align with standard industry rates. When prices exceed the FMP, it can trigger policy violations or require additional approvals.

Using tools like TripGain’s AI-powered booking system, companies can compare real-time prices against the fair market average, helping travelers choose options that are both convenient and compliant. This approach reduces unnecessary spending and strengthens overall travel program efficiency.

Examples in Corporate Travel and Expense
1.
An employee books a flight from Delhi to Mumbai for ₹5,000, which aligns with the fair market price during non-peak hours.
2.
A company rejects a hotel booking request because the nightly rate is 30% higher than the fair market price for that location
3.
The finance team uses TripGain’s dashboard to analyze deviations from fair market prices across all employee bookings in Q2.
Frequently Asked Questions About Fair Market Price
1.
What does Fair Market Price mean in business travel?
It’s the average or reasonable price of travel services like flights or hotels, based on current market rates and conditions.
2.
How is Fair Market Price determined?
It’s calculated using historical booking data, competitor pricing, seasonal trends, and real-time availability.
3.
Why is Fair Market Price important for corporate expense policies?
It ensures employee bookings stay within budget and helps avoid overspending by flagging overpriced services.
4.
Can Fair Market Price vary by city or time of year?
Yes, prices fluctuate based on location, seasonality, demand surges, and events like holidays or conferences.
5.
How does TripGain help monitor Fair Market Prices?
TripGain’s platform compares live travel rates with fair market benchmarks, enabling smart, policy-compliant bookings.