Monday, 8 October 2012

How To - Private Hire Licence. Pricing A 'Job'.

Considerations when pricing.

Since starting Southampton Chauffeur Hire in April this year I have found that this is one of the most important parts of the business, and the most frustrating!
I have carried out research on the internet, asked advise, and tried to find out what other companies charge to phoning for a quote. This critical ingredient appears to be akin to a poker player keeping his cards close to his chest.
I'm told 'Don't worry you'll work it out for yourself. It comes with experience.'
I think the bottom line is that every company has it's own formula for charging which creates a sliding scale of prices.
For sub-contracting purposes the company 'owning' the job does not wish to disclose the cost charged to the customer otherwise the sub-contracted company may negotiate for more.
My personal, and some may say naive, opinion is that transparency promotes trust and loyalty between companies who regularly work together. My goal is to work with a reliable group of self employed drivers and companies who can all trust each other to be fair and provide a high quality service when they are representing another company.
I don't have an issue in disclosing my fee compared to what I would pay when sub-contracting.
I realize it is a choice companies make for themselves depending on factors that don't affect my situation.
There are companies who will provide quotes via their websites. Type in the post codes and various prices will be given depending upon the standard of vehicle required. This is a good indication to gauge your own prices.

1/ Mileage from A to B.
For 'over head' purposes total the mileage to include the return trip as fuel costs will come out of your profit.
Consider 'dead mileage' - mileage which is not a part of the customer's journey or return journey and not subject to the fare.
2/ Journey time. Heavily congested areas will affect the time taken. An extra cost would not normally be added to a fee but it should be taken into account.
3/ Discount for return trip. Some companies offer a reduction but that depends upon there initial quote. Some regular corporate customers also expect a discount.
4/ Mileage compared to an hourly or day rate.
This is applicable to clients who wish a return trip or may have a journey that requires more than one stop or requires you to wait. The total mileage may not be much compared to the time involved in completing the whole job from pick up to drop off. It may be more practical, for a simple return trip, to return home compared to waiting. It depends upon the variables concerned. I can give you a couple of examples to help illustrate.

Example - Pick up 11.00hrs Hythe, near Southampton and drop off at Wimbledon Tennis. Allow 2 hours travelling time arriving at 13.00hrs. 90 miles approx. £15 approx fuel.
If you do not wait but return to base without a fare paying passenger then your fuel and travelling will be doubled ie 4hrs and £30.
Consider the alternative. Find something to do nearby and wait. The waiting time, if you remained in the area, compared to returning to base is 4 hours as you would have to leave Southampton at 17.00hrs to get back to Wimbledon for 19.00hrs. You have saved your travelling time and £30 in fuel!

Example - Southampton to Ascot Racecourse I applied the same rules. I found something to do nearby and did not return, empty, to Southampton.

Example - Southampton to Bournemouth (graduation ball) £120 return fare.
Staying in Bournemouth for return trip: 60 miles taking 1.5 hours with fuel about £10.
Waiting equated to 6 hours and £10 fuel total. Profit £110
Returning to base equated to £20 fuel. Due to time of day I decided to return to base which meant an extra£10 from my profit (£100).

Example - Southampton to Goodwood Festival of Speed. Both passengers were doctors that may have been required to return at short notice. Therefore waiting time was charged as I was required to remain with the car. You will have to adjust the hourly rate depending upon the circumstances and your customer.

Some companies charge an hourly rate if an airport passenger is delayed by more than an hour when passing through customs. That is a matter for you but, I would suggest, it would not be a charge that some customers would be happy to pay.

The ideal journey, and most profitable, is having a fare paying customer going up and back. For example, Southampton to Heathrow £80 fare minus £20 fuel (up and back) resulting in £60 profit. A fare paying passenger, on the return trip, will give you a total of £140.

5/ London pricing. Going into London can be time consuming and, in Central London, make you liable to the Congestion Charge. For London trips make sure you add to the charge if you enter the charging area. Also register your bank card with the Transport For London as the fee will be automatically deducted from your account.

6/ Consider the variables. Referring to my website I can list some issues that may affect the quote that you supply. For airport transfer you may add a small additional charge if required to 'meet and greet' to cover parking. Executive travel clients may end up being good repeat customers so be prepared for offering discount. Wedding car hire customers may have bespoke arrangements that means that you will have to adapt your fee according to a variety of variables. It may not be a straightforward journey from home to church and then to reception. Luxury private hire customers may pay a small premium on top of the normal quote for a special event like a prom or graduation.

I hope this has helped into giving an insight to pricing.

My next post will be - Your professional image and the service you provide