September 9th, 2002, 03:59 PM
I just got a request for a 10 passenger limo for a 8 hr. tour. Unfortunately I do not have a 10 passenger limo. My question is, how much am I entitled to for farming out this job? What is the standard rate for farming out jobs?
September 9th, 2002, 08:45 PM
I am going to assume you booked the job out at the standard rate for your area, after all if you booked a job for $55 an hour and the going rate is $75 an hour then this question is pointless because no one would take it any way. So anyway the standard in my experience is that the farming company keeps the gratuity 15% or 20% on the job. Now this rule is out the window if you cannot find anyone to do the job for that rate. I have booked plenty of jobs in my day and had to give the entire amount to the other limo compamy simply because they would not do it otherwise as the job was booked on such a high demand night.
The job you have booked sounds like a pretty good trip (8 hours) so you may be able to get a little more from the farm out especially if the job is on a low demand day. Do you have someone in mind you want to give the job to? Have you checked out all your competators? after all they will be the ones representing your business and in the end you, choose carefully.
Here is a post I did a while ago on the subject of farming, may raise some other points for ya:
> I need to know more about the farmout world
The way you write this I think you assume that farming is either something you do or not do. Or something you specialize in. I know of some companies that do specialize in it, meaning they are the first choice of some of the large companies (Carey, Music) and make a good living at it but I still think the best way is to try and build your own customer base so you are not so reliant on the other companies handing you work. The fact is you need to farm in and out if you expect to have a successful business. How you go about doing it is the key to whether it will be a headache or a pleasure.
> heard a lot of good things and bad thing can someone
> please help clear this up?
The good things about farming out work:
Having a good source of extra cars and driver can save your skin when you get into a bind. And you will eventually get into a bind, trust me.
Makes your company look bigger than it is, you have three sedans and someone calls up and says they need 6 sedans at the airport at the same time, you say no problem.
You have no Insurance liability for the work
You make a little on the run, but you would have made nothing if you turned it away.
The bad things about farming out work:
Your customers are being served by another company who is also trying to grow it's customer base and many times I have heard of the driver trying to convince the customer to drop ABC Limo and go with them. Whether this was done by the driver himself or sanctioned by the company is never known, you will never get an honest answer on this.
You may get drivers who you would never hire in a million years picking up your most important client. As mentioned several times in these forums training and evaluation of limo drivers is not always on the top of every owners list of priorities.
If you have the farm out company collect on the run for you could now you have an accounts receivable problem if they are late to pay.
The good things about farming in work:
Keeps your vehicles more utilized, meaning it will help defer costs over the long run and will help with economies of scale. How many times have you driven the car to the airport empty? Wouldn't it be better if you could have had a transfer to the airport a couple hours before your pick up that way the car an driver made money going both ways.
Keeps your drivers busy and making money, good for morale.
The Bad things about Farming In work:
You are not making as much money, usually the referring company likes a 10-20% commission on the run.
If the company you got the job from charges less than you and on top of that you minus a commission then you could actually end up losing money on the job (this is not such a problem as rates would be discussed before you agreed to do the job).
Chances are you will not be collecting on the runs from another company so now you have just added to your accounts receivable, do to much of that and you could end up having another limo company owing you lots o money, and we all know that is not the best situation to be in.
Now I am answering these from a sedan service point of view, much of the same applies to Limousine work, just larger figures. Anything I forgot about from a limousine owners point of view?
So how do you do farming right?
You started out by mentioning a farmout contracts, maybe someone could shed some light on that but all of the farming I have ever been involved in I could not say there was ever a written contract in place, it was all verbal and negotiated as we went, Maybe that was why it was such a PITA.
So some pointers from me to you:
Get to know all your competitors, See which one of them meet the same service level standards you provide your customers. See what kind of drivers they hire and how they train them and how they behave.
Once you find a few good companies approach them on establishing a contract or set of rules for them to follow when they do work for you and you agree to a set of rules for their clients. Some things to include:
1. The drivers represent the booking company, they do not try to steer the client to their own company, they carrry the business cards of the booking company and present them when asked or giving a cell phone number to contact the driver. Also airport signs are generic, no company info
2. Payment terms if one company collects for the other company how is that handled, how are credit card transactions handled, Check from the client are made out to who?
3. Signage on the limousines, some companies plaster the side of their limos with their name and phone number, decide if this is acceptable to you or is just bumper advertising appropriate, or none at all.
4. What to do if one of the companies cannot complete the run that they accepted, do they try to farm it to another company, or just give it back to you to handle.
5. Agree on certain driver standards, Dress, reaching the driver (cell, radio, pagers), behavior :arriving 10min early for pick up, opening doors, carrying luggage, smoking, cleaning of limo during run.
6. Agree on certain vehicle standards, Clean, AC working, year make and model.
7. Agree on rates or agree to accept the rates of another company, hopefully you will always be close when it comes to rates so there would never be a problem.
8. Agree on commission structure and what happens if customers are dissatisfied, refund the gratuity?
9. Make books open to each other, meaning you do a run and they say they are charging the client 55 an hour, its below your normal rate but you agree to do it anyway. Can you check the other companies books to see what the client was actually charged? A good relationship requires honesty any company who is honest would be glad to show you they did not charge that client 75 an hour.
10. Agree on driver pay, do drivers get the same amount for farmins as they do for regular customers, you do not want pissed off drivers servicing your clients because they make less on your runs than they do their own companies customers.
11. Agree on data storage of client information. I do 100 jobs for you, did I just add 100 names for my next marketing mailing? Specify what data can be kept and how it can be used.
What else??? Anyone have a standard farming contract they use???
And the last point keep track of how much work you farm out, if you find you are giving away 400.00 runs every other weekend for a year chances are you can afford to buy an additional vehicle with that money and do the runs yourself.
September 15th, 2002, 08:51 AM
try to find a 10px limo company you trust not to steal this client's future business, a single car operator would be your best bet.
also, your charge should be what he would normally charge, thereby not giving the client a chance to switch just because of price.
any operator with half a brain will give you a reduced rate because it is far more likely for you to use him repeatedly than someone off the street. you always take care of your regulars before new clients, don't you?