Travel charge --- how to?

[limo_n00b]

I'd like to setup a "formula" that will help me to calculate travel charges. Should I charge based on time it will take to get to the PU location or should I charge per mile of travel?

I can ask client distance/time it will take me to get to the pickup location and than calculate travel charge.

Any help is appreciated.

[Celebritylimoky]

We charge from the time our vehicle leaves the garage to the time it returns. This is based on our hourly rate per vehicle.

Dan

[Limo Scene]

Many things to consider here. Most importantly is how bad you want the business from the areas you are traveling to and charging for.

I am based in the largest metro area of our county. The county itself stretches 8,161 square miles so I have a lot of area to serve.

We have a radius chart showing the base of our operation with various rings expanding outward from our office. We begin charging 30 miles out in radius circles increasing by 25 miles. Each new ring represents 1/2 hour of travel time billed at the standard hourly rate to come and get you. We charge nothing to come home empty. If we have to travel two hours to a pickup location, there is a minimum three hour service time imposed so we are collecting on five hours but the run will actually take seven. The cost to come home on a two hour drive is roughly $50. I don't mind giving that up if it means we get the job and collect over $500 for the run.

I view it as a need for public service in those tony little remote cities and towns that dot our county. Everyone should be able to have a limo to their wedding or funeral if they so desire. They just have to be willing to pay the fee to get it there.

[Greenpala]

You can come up with a magic number eg. $1.25 / per each mile for a senda, $2.00 /mile for a 8 pass lincoln, etc.

Or you can just charge $50/hr as a standard travel charge. This would be a towncar going rate but use the same for limos just to pay off the travel.

[Steve W.]

Hey N00b, welcome to the forum

You can in fact do either one you like as long as your governing body states as a limo company you can charge by the mile.

Question then becomes not what you can do but what your customers will put up with. Because not a whole lot of people are excited about paying for something they are not getting any use of, they already will be having the limo bill going while they are at dinner, and some are just getting used to that! If all of your competators are starting the time when they get to the pick up you will already be at quite a disadvantage in our price sensitive marketplace unless you are differenciating yourself in some other way that makes up for it.

Because then you have to get to the niddy grtty of things:
If you charge for travel time what do you charge?:
Time that mapquest says it will take to get from your garage to the pick up point?
Time your driver put down as to how long it took them? (and how do you check for padding of the time)
An estimate of time you think it will take (then also factor in rush hour and traffic times)?

Then also I assume you will be paying your drivers for the travel time that you are charging?
Does any gratuity get added to the travel time charge for the driver? (if you add it in automatically)

If you do mileage that will a least be a little more consistant if you take it off your drivers log or mapquest.

All these questions are why the most common thing I have seen is similar to what Limo Scene describes. No extra charges for PU in your city (or small county) then flat charges for outlying areas or some artificial borders that you come up with for your area. You could do zones like limo scene or try to explain it to your customers in some generally known descriptions

Like:
Anything pick up's north of this freeway is $40.00 extra per trip
Anything Pick up's west of this city is $50.00 extra per trip
Pick ups in a, b, and c counties incur a $60.00 travel time fee

Also just for your info many of the larger companies state in thier charges something like:
"Cost for this vehicle is $2.00 per mile or $65.00 hourly what ever is greater."

An average run out here in LA for the company I work for is about 100 miles (that includes travel distance before and after) and 5 hours
so
100x$2= $200 - Mileage charge
5x$65=$325 - Hourly Charge

Hourly almost always comes out ahead except in the casees of airport runs where the market competition for that type of works keeps the prices lower.

Lots of options just find one that is accepted readily and does not cause you any headaches and is compatible with your software system if you have one.

Good Luck!

[David Merrill]

First you need to figure an average number of miles you can reasonably travel in an hour. (Map Quest works pretty good for a time) Then you can translate that distance into an hourly charge. Not only do you have to consider the travel too the pick up you also need to figure the distance from the drop off. I also threw in an extra 1/2 hour for pre and post trip. Remember this. It cost exactly the same to run that business weather the Car has a Client in it or not.

Because I covered all of North East Michigan, I had a lot of "dead head" travel. (really it is not worth it because it was part of my business demise) Lets say I had a run in Alpena, Mi., 90 miles one way from my base in West Branch. I figured my average speed at 45 MPH meaning it took two hours to get to Alpena. The Client wants the Limo for two hours. It is two hours travel back to West Branch. Add in 1/2 hour for pre and post trip, the Limo run will be 6.5 hours at my hourly rate. This too was the time the Chauffeur was paid as I paid by the clock hour and not just the Client hired time like some Limo operators are inclined to do.

The Bus company I broker for does it by the mile. The first/last 55 miles each way are built into the "Live mile" rate but once you burn that up, it is so much per dead head mile and so much for live miles.

My best advice is just try to concentrate on the business close to home.

[ABC NYC LIMO]

Originally posted by limo_n00b:
I'd like to setup a "formula" that will help me to calculate travel charges. Should I charge based on time it will take to get to the PU location or should I charge per mile of travel?

I can ask client distance/time it will take me to get to the pickup location and than calculate travel charge.

Any help is appreciated.
Russell Figaredo, www.abcrnblimos.com (http://www.abcrnblimos.com)
For my Tristate Car Service, I always charge by the hour. Some people charge by the zone or mileage, but, what if you get stuck in traffic for hours(which has happened to all of us)? When you charge by the hour, the client knows exactly what they are being charged for. Also, on the back of every front seat of every cab in America there is a sign that says "All out of town trips are charged as round trips". That is no secret.

[Limo Scene]

I have never seen that sign in a cab. Although being in the industry, I don't do cabs much except in Vegas or Atlantic City.

I think it is the fact that IF you do get stuck in traffic and you are charging by the hour, the client has no way to set a budget and no control over the expense as well as no control over the lies. Yes, people lie. They specially lie to make money.

It was not too long ago that I had a company I farmed a job to try to overbill me on travel charges. It should have been a four hour job but I was charged seven.

I went to the extraordinary steps of calling the hotel in Barstow to find out what time my client checked in. I asked the sub to provide me with a copy of the receipt of fuel purchase in Barstow as I knew he would have filled up there before going home. I then contacted a local CHP official to contact the Barstow CHP area to see if there were any problems with traffic in that area on the date between certain times. I did the same with another CHP area.

The operator then told me that she relied simply on the driver's word when she knew she was busted.

My point here really is, I use tiered flat rate travel charges. In most cases we get there within the time anticipated for travel time. Every once in a while we don't and have to eat it. But, let's face it - running a business is a gigantic gamble in life. Sometimes you're the bug - sometimes you're the windshield.

I think it is better service to tell someone you will charge $XX.XX to come to their city. It gives them peace of mind that that is the extra charge. They shouldn't have to worry about accidents, weather, construction etc. blowing their budget. We make plenty of money that if one trip goes sideways, you say, okay, dust yourself off and get back on the horse.

People appreciate that a lot more than a jar of vaseline before the travel charges climb higher than what they really were.

[gunny]

Travel charges apply if loading or unloading passengers outside of the perticular zone radius that your business operations cover.

Example - I am the only motor carrier between Sarasota & my area some 80 miles north with Port Canaveral permits. So if someone charters me to provide the transport from Sarasota to Canaveral I will apply an additional 2 hours to the rountrip pricing.

Travel time is not based on traffic wait time as one should an idea on how long the total time a particular drop will take based on time of day & price accordingly. Accidents slowing the job up? Just part of the business that needs to be sucked up. If folks want to pay by mileage & traffic wait time with no idea of the final charge, they'll grab a cab. If they want to know the charges up front, they call their local limo service & prearrange the transport. A major selling point.

[Dean Schuler]

Nice detective work Jim !
Originally posted by Limo Scene:
I have never seen that sign in a cab. Although being in the industry, I don't do cabs much except in Vegas or Atlantic City.

I think it is the fact that IF you do get stuck in traffic and you are charging by the hour, the client has no way to set a budget and no control over the expense as well as no control over the lies. Yes, people lie. They specially lie to make money.

It was not too long ago that I had a company I farmed a job to try to overbill me on travel charges. It should have been a four hour job but I was charged seven.

I went to the extraordinary steps of calling the hotel in Barstow to find out what time my client checked in. I asked the sub to provide me with a copy of the receipt of fuel purchase in Barstow as I knew he would have filled up there before going home. I then contacted a local CHP official to contact the Barstow CHP area to see if there were any problems with traffic in that area on the date between certain times. I did the same with another CHP area.

The operator then told me that she relied simply on the driver's word when she knew she was busted.

My point here really is, I use tiered flat rate travel charges. In most cases we get there within the time anticipated for travel time. Every once in a while we don't and have to eat it. But, let's face it - running a business is a gigantic gamble in life. Sometimes you're the bug - sometimes you're the windshield.

I think it is better service to tell someone you will charge $XX.XX to come to their city. It gives them peace of mind that that is the extra charge. They shouldn't have to worry about accidents, weather, construction etc. blowing their budget. We make plenty of money that if one trip goes sideways, you say, okay, dust yourself off and get back on the horse.

People appreciate that a lot more than a jar of vaseline before the travel charges climb higher than what they really were.

[Blue Diamond]

Not everything is close to my area also. I do this:

Pick up is free up to 50 miles. After that it's $1.25 per mile to the pick up location. After that it's strictly hourly. It doesn't cover the fuel cost, but most of the time it pays for the dead head miles on the return.

Most of the time, it makes people change the pick up location, so they are closer to you.

I remind them that fuel isn't free. Operating has it's costs. Some places refuse to go the distance or inflate the costs to make it still profitable. Maybe that's why I stay busy... I stay honest with clients.

[Suzanne]

You should have a base rate when charging for transports. What I do not understand is why some owners of the livery industry along with some customers, think that we owe the customer the service for Free or we are not out for the money attitude. Overhead costs, including fuel costs, insurance, rent, maintenance, auto purchase price, should always be part of the price you charge. But in the livery busines, this seems to not apply. What seems to apply is the undercutting of price, by a lot. This can cause a chain reaction, which eventually can come back on you. If you do not value yourself, neither will your customers. There are customers that do value the service they recieve, and they believe a service provider should be paid for their services. The bottom line is that buses, taxi cabs, airplanes, cruise lines, ferries, and trains all charge a rate, and that includes round trips (including same trip round trips) and returns. Customers do not balk at those charges, and basically put, customers understand that. How about the Lawyers, doctors, Heating & Plumbing service providers? They all have a base rate and customers understand that. But for some reason, the livery/limousine industry is expected by some customers to offer their services for basically nothing. Just because you are sitting behind a steering wheel, does not mean you're on personal time. You are not. A Lawyer sits behind a desk and computer, no different, same with numerous other industries and they get paid their price. We are a service provider, and so are the lawyers, accountants, etc. A service provider is selling ones time to perform a service. A business can not survive on no money coming in. It takes money to keep the business operating.
We start with a base price, and add on the further away we have to travel. We also have to keep in mind what the competion price range is and avoid price "Fixation" which is illegal (violation of the Federal Fair Trade Laws). Customers are influenced by someone' words of lower prices or higher prices. No different than when a customer responds to someone's words about a stock market issue or real estate prices. The lower pricing issue with the livery/limousine industry started somewhere, and it is difficult to undo.

[Dean Schuler]

Suzanne, Nice post.If you search the New York Times archives in 1962, you will find a great article that talks about hustlers. One hailed Mr. Carey on the street. Mr. Carey accepted the ride and then gave the hustler his card when he got out. The hustler sped off like a demon ! The problem with price cutters and short timers was very small back then. In the 1970's I don't recall seeing any price-cutters in the little market I worked in. The big cities no doubt had some of their ilk. Frankly, you can properly place blame on the limousine boom of the early 1980's and the long lasting effects it had for the denizens of selling below cost.
Originally posted by Suzanne:
You should have a base rate when charging for transports. What I do not understand is why some owners of the livery industry along with some customers, think that we owe the customer the service for Free or we are not out for the money attitude. Overhead costs, including fuel costs, insurance, rent, maintenance, auto purchase price, should always be part of the price you charge. But in the livery busines, this seems to not apply. What seems to apply is the undercutting of price, by a lot. This can cause a chain reaction, which eventually can come back on you. If you do not value yourself, neither will your customers. There are customers that do value the service they recieve, and they believe a service provider should be paid for their services. The bottom line is that buses, taxi cabs, airplanes, cruise lines, ferries, and trains all charge a rate, and that includes round trips (including same trip round trips) and returns. Customers do not balk at those charges, and basically put, customers understand that. How about the Lawyers, doctors, Heating & Plumbing service providers? They all have a base rate and customers understand that. But for some reason, the livery/limousine industry is expected by some customers to offer their services for basically nothing. Just because you are sitting behind a steering wheel, does not mean you're on personal time. You are not. A Lawyer sits behind a desk and computer, no different, same with numerous other industries and they get paid their price. We are a service provider, and so are the lawyers, accountants, etc. A service provider is selling ones time to perform a service. A business can not survive on no money coming in. It takes money to keep the business operating.
We start with a base price, and add on the further away we have to travel. We also have to keep in mind what the competion price range is and avoid price "Fixation" which is illegal (violation of the Federal Fair Trade Laws). Customers are influenced by someone' words of lower prices or higher prices. No different than when a customer responds to someone's words about a stock market issue or real estate prices. The lower pricing issue with the livery/limousine industry started somewhere, and it is difficult to undo.