TOPIC: Are you planning a rate increase for 2017?
We did our first rate increase in two years on October 1. Most of our base rates in the Atlanta suburbs increased 5-20 percent depending on distance, plus we enacted a fuel surcharge of 10 percent and an STC fee of 10 percent for the first time. So far, with the increase, we have 95 percent retention and give a 10 percent discount for our regular clients through February (the slow months). We do not plan to do an increase in 2017 except to remove the discount.
We’re currently seeing rising costs for labor, maintenance, new vehicle acquisition, and technology (tablets, apps, websites, GPS, software).
Eric Alimena, CEO & Founder
Alimena Limousine & Worldwide Transportation in Atlanta, Ga.
Our rates are the engine driving our service, product, and growth. We designate a rate committee in August that meets weekly until October with the goal of rolling out new rates for the following year. Our rate committee is made up of managers and chauffeurs, which gives us a broad spectrum of strategies and perspectives.
We take our time to understand each specific market, our customer elasticity, and our competitor initiatives. Rates can create interest or be detrimental to growth. Some businesses use rates to overcome losses or slow their growth. We believe rates should never be used to manipulate margins. We deliver our budget to the rate committee, giving it the opportunity to build a rate structure that can help achieve the revenue initiatives in that budget. Loyalty and service trump convenience to a point.
Kevin Duff, President
Signature Transportation Group in Chicago, Ill.
The answer is both yes and no. We are holding our rates steady on some vehicles while moderately raising them 3-5 percent on others. Rates are also client specific: Certain clients’ rates are locked in for this year. Most importantly, for new clients, we are testing a basic form of dynamic pricing based on expected demand surges in certain months/dates, etc. Ultimately, we would like to use dynamic pricing across the board but that may be a few years away.
Sami Elotmani, Vice President of Operations
Destination MCO in Orlando, Fla.
I’m not planning to increase prices in 2017 for one main reason: Uber sets the highest black car prices in Colorado and Yellow Taxi’s black car division, Ecar, sets the low-price standard. Therefore, we have to stay between the two or risk getting no business whatsoever. Due to the steep competition, I’ve been toying with the idea of getting out of the black car/SUV business and adding Sprinter vans, but the Colorado Public Utility Commission runs on an antiquated permitting system that allows any common carrier permitted company to obstruct an application for no reason, which has blocked our attempts so far.
Steve Felt, Owner
Rocky Mountain Luxury Limousine in Denver, Colo.
Currently, we are not planning to raise rates in the new year. Our customer base has been loyal to us and we plan on giving that loyalty back. The TNCs have tried to hurt us but we continue to grow by a minimum of 6 percent each year. Professional chauffeurs and great service have to be the blueprint for success today more than ever.
Tyrone Gale Jr., President
Atlantic Transportation in Rehoboth Beach‚ Del.
Due to the rising costs of insurance, employee benefits, advanced technology, etc., we will be raising rates 5-7 percent depending on the vehicle and service type. We continue to push to have the highest service levels, newest technology, and latest vehicles in our market. Once we implement the rate increase, we will promptly notify our accounts.
Kim Garner, Co-owner
BEST Transportation in St. Louis, Mo.
We are certainly planning to raise our rates. Arizona voted for a wage increase, which will result in an almost 20-percent hike in hourly wages. Our company has also implemented more technology, which adds to our bottom line. As a result, we will be adding 20-percent more to our pricing structure.
Abdou Louarti, Director of Operations
Diamond Transportation in Tucson, Ariz.
We have not adjusted our prices for four years, even with all the abusive inflation that exists in Brazil. However, next year we will raise our prices by 10 percent, since gasoline rose more than 30 percent in 2016. Unfortunately, it is impractical to keep the 2012 prices without any increase.
Robson Maciel, Director
Chauffeur Services Brazil in Sao Paulo, Brazil
We’re looking to restructure our prices next year, which will increase the rates. Our plan is to roll the gratuity into the base price in order to give an all-inclusive rate. Ultimately, this will simplify our rates and deal with the increase in the minimum wage and how that will affect workers’ comp. It will also address other issues in regards to paying gratuity.
Jeff Nyikos, President
Leros Point to Point in Valhalla, N.Y.
We have planned a 5-7 percent increase to airport service and a 3 percent to hourly rates. With wages going up, and unemployment at 3 percent in Seattle, most of our clients understand the increase. We might lose 5 percent of our customer base to the rate increase but will cover it by getting new clients. We have already raised the rates on the website and have received no grief about it. With excellent service, our rates are justified.
Jess Sandhu, Vice President of Operations
A&A Limousine and Bus Service in Seattle, Wash.
We are not planning any increases for 2017 for the following reasons: One, we believe the new administration under President-elect Trump to be “business friendly” and, as a result, our business travel accounts—including inbound affiliate work—will increase; two, a pro-America energy plan will hopefully keep fuel costs low or even reduce them further; and three, we are also hoping for a reduction in costs based on reduced regulations and a revamped health care program. If these don’t occur then we will revisit mid-year, but for the immediate future we are very excited.
Vince Schneider, Managing Partner
JED Transportation/Country Club Limousine in Hazelwood, Mo.
It is essential to raise rates annually by at least the consumer price index for your region. The cost of doing business increases regularly and those who do not raise rates annually can be ill prepared. Clients understand annual increases to the cost of services, as opposed to a hefty increase every couple years. Unless you’re bound to a contract, a small annual increase is the way to go.
Jeffrey Shanker, General Manager
RMA Worldwide Chauffeured Transportation in Rockville, Md.
The question is really how we can survive without instituting a serious rate hike. As a small operator who handles a lot of affiliate work in New Jersey, I’m not seeing my affiliates change their rates much, let alone make many big changes to how business is done in general on the front end.
I get call after call for last-minute work because we all simply cannot handle the demand like we used to. I’m happy to take the calls; however, we have a depleted and underpaid driver pool because the rates do not support anything more. Uber further bleeds the pool we once had—rates need a makeover!
I wonder how long this can continue as we all cannot find drivers or reduce our costs more. If the rate issue is not addressed industrywide, how will we all survive? Airlines raise rates, so why not us?
Christian Stochholm, Owner
New Jersey Limo Finder in Short Hills, N.J.
Our pricing is based on actual cost including labor (with benefits), mileage cost, and overhead, which vary by vehicle type. We also look at historical (12 months) data and increase our price accordingly. Typical increases range from 1-4 percent depending on the vehicle. The markup/margin is based on utilization for that day.
Stephen Story, President
James River Transportation in Richmond, Va.
Our main goal for 2017 is to continue delivering the highest levels of quality. When it comes to pricing, though, we are not planning to increase rates for 2017.
The three South Florida counties—Miami, Dade, and Broward—have drastically softened regulations. As a result, we are able to operate an unlimited amount of vehicles without having to have a $25K medallion attached to each vehicle per county. This means added savings passed on to our clients.
So, yes, we are paying more to our chauffeurs to ensure the best possible quality; yes, insurance continues to be challenging; yes, we continue to invest in technology; and, yes, we may be looking at higher gas prices in 2017—but, despite all that, the changes in the regulatory arena have been huge (and beneficial). We are also offering more features, like optional curbside pickups, and we have also lowered our hourly ADs to two hours.
Rebekah Urbina, Owner
Apollo Transportation in Boca Raton, Fla.
We are planning raising our fares about $3 per airport transfer because legislated wage increases went into effect in Connecticut January 1. We also have to match the New York City tolls when they increase in March.
Charles Wisniewski, President & CEO
Teddy’s Transportation System in Norwalk, Conn.
We’ve loved hearing your answers to our benchmarking questions since debuting this interactive section—but we always welcome suggestions for future topics, too!
Have you wondered how others in the industry have tackled a concern you’re currently facing, handled a delicate issue, implemented a certain policy, or do you simply want to propose a topic for our consideration?
Send an email to rob@chauffeurdriven.com and you just might see your query answered in a future issue. We look forward to your input!
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