Industry Research

How To Price Your Services For Tough Times

Posted on December 2, 2009 by LCT Staff - Also by this author

Operators are dropping minimums and layering their prices and vehicles to get the most business possible as clients cut or reduce transportation budgets and services.

Is it better to do 15 separate runs over 15 hours than require “park and wait” pricing? Can creative pricing carry operators through tough times? What are the risks and challenges?

LCT spoke to operators about their views on creative pricing strategies.

Using Limo Buses As Shuttles During Non-Retail Times

Don Kensey, Cross Keys Coach, Williamstown, N.J.: “I book a shuttle and won’t farm it unless the limo bus is booked. That way it guarantees that my limo bus always gets out and is used. I have never had anyone turn down the limo bus as a shuttle.”

Two One-Way Transfers vs. An Entirely As-Directed Trip

Jim Luff, The Limousine Scene, Bakersfield, CA: “I got rid of that three-hour minimum a long time ago. Why? Because people called all the time for a ride to the airport or a ride from the wedding to the reception or a ride to work and no one else was doing it. I bumped up the price for such trips to $119 and people pay it. If I get 21 hour runs a month, that adds up to $2,392 per month in additional revenue. That is more than a car payment!”

Bito Pimenta, Enova Transportation, Ft. Lauderdale, FL: “I had a client’s secretary ask for special accommodations to take her and a bunch of kids to a concert in a limousine then pick them up afterward. We don’t do two transfers for this type of ride typically but agreed to do it this time. We dropped the party off at the concert and I was lucky to be able to squeeze in an airport transfer with the same vehicle. One of the kids got sick at the concert and the secretary wanted to know now why she couldn’t have the limousine back there then to pick them up. Although we explained that this would not be the case when we booked it, it didn’t matter. We almost lost an important account because of this one ride that was done outside of the norm. Even though you tell clients that you will be using the vehicle for other things, they don’t always hear that. Perception is reality.”

One Hour Charters vs. Three-Hour Minimums

Eli Darland, Rare Form Limousine, Bellevue, WA: “We price our single hour service at 80% of two hours. Therefore, three hours always cost less than two single hour reservations (aka the “split”). If we have two or more hours between the split, we can usually fit in another single hour in between if we can sell it. Often, a customer will slightly adjust their plans to squeeze into our slot.

“Single hour service is not available in any stretch (defined as having a divider window) for reservations beginning at 4 pm or later on Friday or Saturday nights, period. Aside from Friday and Saturday nights, we don’t have to hear that 'we don’t need the vehicle for two hours or three hours.'

"No problem, we have a solution for that. We put our outstanding service and vehicles in front of one more client from which we can get possible referrals. We never have to bargain. We have a strict internal “no bargaining” policy, so we help the client structure the reservation to save them the most money, which they appreciate. We always inform them that the trade off for the savings is that the vehicle cannot be used as storage in-between; it will be there when the event is scheduled to end; and it will not be available to them during the event. In our heavily competitive and highly discount-oriented market, this shows we understand that people could be on a budget, but that we have rules that the client must agree to in order to take advantage of our reduced pricing options.”



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