WHAT TO DO

[TANMAN]

Have a person that wants a contract for $6,000.00 a year wants 90 hrs at i think it was like 67.50 per hr BLOCK HRS I like this idea but she wants to pay a monthly of $500.00 do i go for it and just not let her exceed maybe 10 hrs a month. or try to get lets say 50% down or 30 hrs as im really thinking ill be firm 100 per hr plus 20% HOW WOULD YOU right this contract

[Limo Scene]

The only advantage to dropping down to whore rates is if you collect ALL the money up front. THAT is your incentive - money in the bank today. If she is going to pay monthly, charge her your going rate at the time of service in that month and collect your money when she rides. No advantage to spreading out payments. When you collect $6000 today, I guarantee you that same exact $6000 will not buy you as much in 12 months. The price of everything will go up. If you look at it practically, lets say you went on a shopping trip today with $6000. Now the same shopping trip with the same $6000 12 months from now. You will get 6.2 less gallons of gas, you will get 4 less loaves of bread etc. because the money is worth less as inflation naturally occurs.

[TANMAN]

I SEE AND I SEE BY YOUR WEBSIGHT YOU HAVE DONE THIS BULK sale before do i not take this like a frequent flyer and monthly bill?? may be half down half 30 days
?????? is doing it this way whoring???????
or a way of doing biz...

i see the guy putting rent my limo for 67.50 per hour on a sat night maybe whoring but this would be when she wants the car and garanteed 67.50x90

[RSLary]

I'm new the limo biz but not to business.
I think I would look at it like retainer.
For 6k upfront we will be at your service whenever needed, just say when and where.
The prices will depend on season, day/time, size of car etc but certainly we would be willing to offer a reasonable discount off our reg rates. If she is a regular in a sedan, your prob ok at that rate but if she doesnt have history I see Saturday night out in a 14 pass, her sisters wedding......Its a business decision but would sure hate to see your H2 out for 67.50 on a Sat night. Make sure you spell it out CLEARLY. You don't want her pissed off because you didnt agree to come over and mow her lawn too.

[Skerdian]

Tanman,
just charge her monthly. Do not count on a yearly account. As every month passes, you see how much business you get from this account and base it off that. You will most likely get reservations at much higher hourly rates, and I do not think this account is worth it. Explain to your account manager your fuel costs, etc. and give them an hourly price slightly below your norm prices. $68 an hour for a stretch? Never. $6k is nothing compared to what your car/services can make in a year. The average gross per stretch is around 80-100k a year.

[LIMOJESS]

Monthly or weekly will be the way to go to charge the customer.

Is the client giving you the whole years schdule upfront?

[TxLimoGuy]

$6000 customer is hardly a qualifier for any sort of discount. Sometimes people think an amount that is large to them is also large to you. You need to set the reality.

That is more like a regular customer who does 5 airport trips a month at $90 a pop. That is just a regular customer and that small volume does not warrant any perks or discounts.

[Limo Scene]

Not sure why I did not respond back to this post when it was active to answer the question. Let me re-phrase what I was trying to say......

If you are going to give a discount for a "block sale" - you need to collect ALL the money up front. Think of the "block" as a tangible item with hours inside of it that can be pulled out when you need to use them. Now think of the block as a "case" of product. The store will sell you the case at the case price. If you want them individually, you need to pay the retail price of each hour. Fairly simple.

When you are new in business and struggling for cash, block sales are an excellent way to infuse your bank account with cash quickly (but only if you collect all the money up front) and build loyalty with your client.

[Dean Schuler]

When you are starting out your focus needs to be on securing steady revenue streams. Discounted bulk hours are certainly a potent tool for the operator who burns with desire to succeed. I had one account that paid me every thirty days and more often if I needed it. That one account built the foundation of my business.
Originally posted by TANMAN:
Have a person that wants a contract for $6,000.00 a year wants 90 hrs at i think it was like 67.50 per hr BLOCK HRS I like this idea but she wants to pay a monthly of $500.00 do i go for it and just not let her exceed maybe 10 hrs a month. or try to get lets say 50% down or 30 hrs as im really thinking ill be firm 100 per hr plus 20% HOW WOULD YOU right this contract

[MarkRi]

Originally posted by TxLimoGuy:
$6000 customer is hardly a qualifier for any sort of discount. Sometimes people think an amount that is large to them is also large to you. You need to set the reality.

That is more like a regular customer who does 5 airport trips a month at $90 a pop. That is just a regular customer and that small volume does not warrant any perks or discounts.

txlimoguy, how much money does a custumer have to spend per year with you before you think of them as not a regular customer?

[Limo Scene]

I can tell you my standard on that Mark is an average of $2500 a month revenue to get anything special. That would be $30,000 a year. $6,000 is chump change. I seriously had one customer drop more than $6,000 yesterday alone. I didn't discount anything on the order. But come Christmas time, the people in that company that make those rides happen will be treated to a Holiday Light Tour as an expression of our appreciation.

We started as a one car operation. When we grew to 4 cars we might have done it too soon as I was wondering how we would make the payments in some months. I made a handful of block sales. I used the cash from those block sales (collected all up front) to make payments on cars in advance and we were no longer behind the eight ball. It took the pressure off.

Block sales are still on our website today. One primary reason for offering a discount on block sales is these people are allowing me to use their money today. The discount rate is the "interest" they earned by allowing me to do so.

The number one buyer of block hours WAS realtors. As you may have heard, the housing market - not so good right now. However, never one to stay idle, I have refocused my target audience to be realtors specializing in distressed homes. Homes in foreclosure or danger of foreclosure. There is a new market beginning to emerge of bargain hunters. I have already lined up two realtors who target those bargain hunter investments.

I have not closed either deal yet but I expect them to turn into block sales and if I can convince them, we will begin running "distressed real estate tours" on Sunday afternoons in the near future.

[Dean Schuler]

Luff is touching on a key element of the business that I have been preaching about for years : Hours of Utilization. When I started out I did quite a bit of subcontract work for established companies and I had a few block sales accounts. While other operators were laughing at me, I was amassing serious hours of utilization every week on my vehicles. Since I also did a fair amount of top dollar runs I was healthy financially. Most of those who laughed at me are long gone-they couldn't survive economic downturns. Those that are left aren't factors in my market anymore. I spent quite a bit of time on creative packages and niche markets. Some worked out very well and I was exposed to clientele I otherwise might not have met. I still think about hours of utilization all the time.
Originally posted by Limo Scene:
I can tell you my standard on that Mark is an average of $2500 a month revenue to get anything special. That would be $30,000 a year. $6,000 is chump change. I seriously had one customer drop more than $6,000 yesterday alone. I didn't discount anything on the order. But come Christmas time, the people in that company that make those rides happen will be treated to a Holiday Light Tour as an expression of our appreciation.

We started as a one car operation. When we grew to 4 cars we might have done it too soon as I was wondering how we would make the payments in some months. I made a handful of block sales. I used the cash from those block sales (collected all up front) to make payments on cars in advance and we were no longer behind the eight ball. It took the pressure off.

Block sales are still on our website today. One primary reason for offering a discount on block sales is these people are allowing me to use their money today. The discount rate is the "interest" they earned by allowing me to do so.

The number one buyer of block hours WAS realtors. As you may have heard, the housing market - not so good right now. However, never one to stay idle, I have refocused my target audience to be realtors specializing in distressed homes. Homes in foreclosure or danger of foreclosure. There is a new market beginning to emerge of bargain hunters. I have already lined up two realtors who target those bargain hunter investments.

I have not closed either deal yet but I expect them to turn into block sales and if I can convince them, we will begin running "distressed real estate tours" on Sunday afternoons in the near future.

[TxLimoGuy]

MarkRi:

In general our threshold for any type of consideration for billing or pre-negotiated discount is $50K per year.


Originally posted by MarkRi:
txlimoguy, how much money does a custumer have to spend per year with you before you think of them as not a regular customer?

[LIMOJESS]

I know what Tony is trying to say. I have regular airport clients that send $500 a month on sedans and some companies that spend $2000 to $5000 a month. So $500 a month is nothing compared to the big picture.

In two weeks I am doing a convention in Seattle Valued at $8000 total for only 5 days of service. From Monday to Friday.

So $6000 a year means nothing to me when you have a 20 pass hummer that can make that in a month.

Think about it.