Money

Don’t Fear Reactions When Raising Your Rates

Lexi Tucker
Posted on October 25, 2019

Jennifer Cuozzo, president and CEO of A Touch of Class Limousines, Frederick, Md.

Jennifer Cuozzo, president and CEO of A Touch of Class Limousines, Frederick, Md.

 “That’s much more expensive than what the other companies in the area are charging!”

That’s a line you’ve heard a billion times, no doubt. The average person doesn’t understand the difference in what they are getting with a true luxury transportation company — and that’s the problem. Instead of going after “average,” you need to be pursuing the kind of clientele who won’t hang up the phone the moment you give them a quote.

When you find such clients, they won’t bat an eye when you decide to raise prices when the time comes. Here are a few operators who have increased their prices and handled inquiries about it with aplomb.

Don’t Sell Yourself Short

Jennifer Cuozzo, president and CEO of A Touch of Class Limousines, Frederick, Md., raised her company’s hourly rates 10% at the start of 2019 for sedans, SUVs, vans, and limousines.

“Our prices have been the same for many years although our vehicles are nicer, and our service has improved,” Cuozzo says. “We started to hear comments like, ‘your prices are the cheapest.’ Although we want to be competitive in our marketplace, being the cheapest company in town is not our goal. We are one of the few companies in our area that keeps a larger fleet of stretch limousines. As other operators know, the maintenance on the stretches is high. This increase in price has helped us offset this cost and be a little more profitable.”

She did not address the price increase formally, and only gets a comment on it on occasion. “As a whole, our customer base has been receptive to our current pricing structure. So much so, in fact, we will do a few more small increases in 2020.”

Cuozzo says the pricing changes have helped increase her bottom line and allowed her to increase chauffeur and office staff pay rates, as well as give back to the community a little more.

“Raising your prices can be scary. There is always the fear of losing business, but you have the option to discount during a slow season or for last minute runs when you still have vehicles available.”

Just Do It

Kathy Baker, general manager of Argenta Limo in Little Rock, Ark.

Kathy Baker, general manager of Argenta Limo in Little Rock, Ark.

It had been 10 years since Argenta Limo in Little Rock, Ark., raised prices. Kathy Baker, general manager, says they increased their rates by 3% two month ago and are happy with the results so far. 

“Expenses have gone up a lot. You’ve got insurance, labor costs, technology, and more. We weren’t increasing our bottom line, and we wanted to grow.” Even in this short time, she says her company is seeing a difference with labor costs evening out to where they should be.

She didn’t mention the increase to most of her clients, but told some of the business's larger clients that send a lot of work. For jobs already on the books, they honored those prices and raised rates on new jobs only.

“We didn’t get a single bit of push back. One client joked with us and said, ‘who told you to raise your rates?’ and then said, ‘Kathy, I think it was beyond time for you to do it.’” In fact, Baker says the company may not have raised them enough. They wanted to do a small increase, and then look again after a few years to see how much further they could go.

What is her advice for companies who are hesitating? Don’t wait — raise your rates now. Look at your costs, and if you are losing money or just breaking even, you need to act.

“Know your worth. If your level of service is high and everyone is coming to you instead of your competitor, be proud of it and have your rates reflect that.”

Why Should You Be The Exception?

Kim Grzywacz, co-owner of CIT Signature Transportation, Ames, Iowa

Kim Grzywacz, co-owner of CIT Signature Transportation, Ames, Iowa

Kim Grzywacz, co-owner of CIT Signature Transportation, Ames, Iowa, says because her company does charter runs, they raise rates regularly. She looks at getting 2% to 5% more on a yearly basis. They have repeat trips with various clients, and pricing can depend on when they are going, if it’s a slow or busy time, etc. “If we feel we’ve maxed out already, we don’t want to raise our rates too much because the market won’t bare that.”

She notes all costs are rising. “It’s not just fuel. Look at the talk happening across the nation on wage increases. I’m hearing about insurance increases from 20% to 40%. Then you must consider tech needs brought about by the ELD mandate and more money being spent on keeping logs and GPS tracking. Customers want Wi-Fi, and you have to take new parts and equipment into consideration as well.” 

Rates are based on trip distance and number of days buses are chartered. They also have fixed local rates, but those are informed by the market changes.

Grzywacz doesn’t announce price increases, and if it comes up, people will often understand once she explains the situation. “Everyone is watching the news and are aware wages are on the rise. They feel their own health insurance increasing, everyone feels fuel price increases…it makes sense. What other services do you pay the same price for now that you’ve paid for the last five years? Even hairdressers raise their rates.”

She recommends rolling out increases slowly so it’s not a big deal for people’s budgets. “Most tend to budget for a small increase anyway when they are planning for the next year,” she explains. She also mentions it helps a company maintain and purchase new equipment, which in turn benefits clients.

“If you regularly increase prices, it becomes normal. Very rarely do we get pushback. Explaining usage pricing to clients can help as well. If the last time they took a trip was on a Wednesday when it was dead and this time they picked a sold-out, busy weekend, of course it will be more expensive.”

Related Topics: cost efficiencies, customer service, finance, financial planning, money, rates, revenue growth, revenues, women in the industry

Lexi Tucker Senior Editor
Comments ( 1 )
  • Ken Poblano

     | about 3 days ago

    These are exactly the stories the industry needs to hear because so many owners are scared to raise prices in fear of losing clients. Its apparent after the talks I had with owners at LCT East showing them how to stop paying credit card processing fees and pass that fee to the clients. They all said the same thing "what if I lose customers". The ENTIRE Livery Industry is losing 4% by paying the credit card processing fees and all it will take is for everyone to come together as an industry and make the switch, game over, clients will stay put and everyone profits 4% overnight forever, is that so hard? Its no difference than raising rates each year. In my eyes if you lose clients over 4 cents on the dollar then your value sucked to begin with and clients stayed to save a buck, not because you have a great company. "Price is only an issue in the absence of value" I always say! Major kudos to these ladies who have stepped forward to increase the bottom line of their companies. Put them on stage in Vegas because it takes guts and determination to push forward in today's marketplace. Know your value people and follow these leaders.

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