You asked for it and we listened. In this column, we ask operators of all sizes and from all walks of the industry a question about their business and report their answers so you can assess how your own company compares to your peers. If you would like to participate, please email Rob Smentek at rob@chauffeurdriven.com for next issue’s question.
TOPIC: In light of the upswing in costs, have you raised your rates? If so, by how much (%)? How have clients reacted? If not, are you planning an increase in the near future?
We have seen a dramatic uptick in fuel, staff, and insurance costs over the past 18 months. We had to address each one individually, not just for the current increase, but also for future impact. We felt addressing the current need and ignoring the trend would result in a second rate increase that customers might push back on. Once we did the analysis, we were able to come up with rates that made sense for both point-to-point and hourly services. Our biggest challenge was balancing the rate increase for non-contract work to offset our contracted rates, which we couldn’t easily adjust. In all, we have had rate increases of more than 20 percent in some cases, and to this point, our clients have not pushed back at all. It will be something we monitor closely as we continue to communicate our value proposition frequently.
Maya Adrine, Vice President/Business Development
Golden Limousine International in Ann Arbor, Mich.
Traditionally, I would raise my rates slightly every year with little to no pushback from clients as I think they are accustomed to it. Although this year, I have instituted dynamic pricing using the LQC system with Addons based on supply and demand—and couldn't be happier. My pricing now fluctuates and, although it is hard to quote on-the-go, I am definitely generating higher revenue trips. I think the customers also enjoy how easy it is to get a rate and book a vehicle online that they are willing to pay more for the convenience of not having to talk to anyone unless they want to.
Kirk Bagger, CEO
Captains Car Service in Parma, Ohio
We raised our rates by 10 percent in January 2021. We have also just increased our rates another 5 to 10 percent depending on the market. We have not received any pushback to our rate increases to this point. However, we did not raise our rates on yearly contracts, but plan on pushing those to higher gains during our next contract renewals. As far as raising rates in to the future, we will most likely base it on two main factors: 1) fuel costs and 2) increase in wage minimum requirements per our operating region. Inflation is here, and we have to be ready to adjust our costs to regional economic stimulus.
Michael Barreto, President
Metropolis Passenger Logistics in Philadelphia, Pa.
For reasons above the rising costs of fuel, we have made the decision to increase our rates 17 percent. Fuel was one factor; however, the additional costs to keep our employees and our clients safe come at a price that we just can’t and won‘t absorb. When explained, in a manner that emphasizes a safe ride, we haven’t found any pushback. More importantly, we are making a statement that safety is priority one at Mosaic Global Transportation.
Maurice Brewster, CEO
Mosaic Global Transportation in San Jose, Calif.
We have been very careful regarding raising our rates, even though the whole market is increasing a lot while all of our fixed costs are on the rise. Also, we are aware that so many people are still suffering traumatic financial problems originated from COVID. Soon, however, we will have no other option and will be forced to increase some rates to cover all the extra costs that were added to our overhead.
Fernando Carlison, Jr., Co-founder/CEO
Mundi Limousine in Deerfield Beach, Fla.
We have not raised our rates. We have always been a rate-plus-gratuity company without all the “plus, plus” business. We are considering adding surcharges for early/late services, and passing along tolls and airport fees like many in the industry..
Carlos Cortez, President/CEO
Cortez Transportation Company in Topeka, Kan.
We have not raised our rates as we are still down in (local) business. We fortunately haven’t had any serious increase in costs yet, and economic predictions are promising, so rising rates is not our concern now. But that may change once traveling to Europe is possible again.
Richard de Krijger, General Manager
DMC Limousines in Amsterdam, Netherlands
We are currently holding tight with our 2020 rates as our clients are still in the “I deserve a discount” frame of mind—the COVID Effect. I have instructed my staff that we don’t discount and to be strict with returning deposits (of course, the clients never see the “nonrefundable deposit” language). We also did not know what the horizon looked like as it relates to other companies in Dallas shutting their doors. Very few have closed up shop and so competition is fierce, therefore, we did not have a rate increase starting in 2021. Being in Texas, our fuel, while it has gone up, is not as bad as it is on either coast. I expect that we will be making a 5 to 8 percent increase starting in 2022, if not sooner in the fall.
Eric Devlin, President/Owner
Premier Transportation Services in Dallas, Texas
As of right now we haven´t raised our rates, and are not planning on doing so in the near future.
Katharina Monsberger, Managing Director
RSL Premium Chauffeured Services in Vienna, Austria
We raised our rates 10 percent in 2021.
Michael Oldenburg, CEO/President
United Limousines in Offenbach, Germany
Between the shortage of drivers and high expectations of our passengers, we needed to make a change in rates. Our rates effectively went up 10 percent across the board effective in June to cover all of the new unseen costs that have crept up on this business. From gas, wages, equipment, security, communication, supplies, utilities, and parts, it seems like everything is increasing majorly.
Gus Ortis, CEO
Executive Transportation in Minneapolis, Minn.
We have increased our rates between 8 and 26 percent depending on the vehicle and utilization.
Sam Rubin, Owner
Four Seasons Concierge Transportation in Park City, Utah
We’ve held our rates on point-to-point sedan and SUV transfers; previously, we were the highest in our market and felt that we would see fierce competition from the TNCs. It looks like it’s just the opposite and people are leaving them for chauffeured car—so we’ll probably have to rethink our plan. We raised hourly charters in specialty vehicles about 25 percent, primarily to slow the business down… which didn’t work. Clients are booking events at a rocket‘s pace with no care about rates. I think this will continue for some time.
Doug Schwartz, Founder
Executive Ground Transportation in West Babylon, N.Y.
We have adjusted rates and will continue to do so; not a specific percentage, but through adjusting some minimums as well as transfer rates. We’re also considering adding late-night/early-morning fees and increasing FBO rates.
Quentin Shackelford, Owner
AllClassLimo.com in Wichita, Kan.
We did not raise our rates for 2021 because many clients had the same difficult time that we did. We will raise our rates slightly by 2022 when the world is hopefully normal again.
Bart van Leijden, CEO/Founder
ETS Luxury Driving in Barendrecht, Netherlands
We have not risen the rates, nor do we intend to. Occasionally, we even offer additional discounts, compensating the cost increase with overall jobs volume, which is still far from pre-pandemic times. Our biggest advantage is that we never ceased activity, even in the roughest of lockdown. This way, our drivers are comfortable with strictly following COVID safety protocols, while the competition is still shut or just starting to adapt.
Joseph Votano, CEO
Abaser Limousine Service in Barcelona, Spain
We’ve loved hearing your answers to our benchmarking questions—but we always welcome suggestions for future topics, too!
Send an email to rob@chauffeurdriven.com you just might see your query answered in our next E-News.
[06.29.21]