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: Do you find yourself undercut by your competitors and how do you handle it?
We prioritize quality and excellence over affordability, which can be a great selling point for customers who value luxury and exceptional service. Emphasizing the superior experience and attention to detail that we offer is helping us differentiate our brand from competitors who may focus solely on price.
Lorenzo Armani, President & CEO
Absolute Styling Limousine/Travel in Style in Vancouver, B.C.
Pricing is always the easiest way to be competitive. In recent years, with inflation and low supply, the real value is consistency and an up-to-date fleet. Affiliates don’t mind paying more to make sure clients are receiving the same type of service in every market.
Deanna Ballard, Director, National Accounts & Affiliate Relations
Signature Transportation Services in Nashville, Tenn.
Thankfully, this is not something we experience very often. If it should arise and a client brings to our attention that another company is offering a lower rate for the same service, we kindly ask for a written quote. That doesn't mean we will match the rate, but we will do our best to explain our pricing structure and level of service we offer our clients with the desire that a reservation can be secured.
Bryan Beale, General Manager
A&A Limousine Service in Northampton, Pa.
We have a particular competitor who advertises within the industry to affiliates as being considerably lower than us in price. We have the stance that while we are more expensive, we offer better service, better cars, and have more flexibility with affiliates. We stick to our general game plan of keeping our fleet up to date (and most importantly, providing excellent service). We accommodate whatever is humanly possible for affiliates. Undercutting prices does no good for any market, and ours is no exception. We choose not to be in a race to the bottom.
Nick Boccio, General Manager
Buffalo Limousine in Buffalo, N.Y.
We firmly believe in providing value through superior quality and service rather than engaging in price wars with our competitors. While some may undercut us on pricing, we remain steadfast in our commitment to maintaining our prices or even increasing them where necessary. Instead of lowering rates, we concentrate on continually enhancing our product offerings and services to ensure our clients receive the utmost satisfaction and value for their investment. By prioritizing excellence over price reductions, we establish ourselves as a premium choice in the market, attracting clients who prioritize quality and reliability above all else.
Eran Brill, General Manager
Superb Limousine in Tel-Aviv, Israel
We experience this on a regular basis as our market is oversaturated with operators, both licensed and unlicensed. I teach my team that when we are asked to price match to hold firm to our values. We are not in business to be the cheapest; we must communicate our pricing with confidence in the service that comes with it. What is perceived as expensive is relative to the person you are communicating with. What is more costly are failure and recovery. If we articulate that openly to our customers, if it matters, then they pay for the comfort.
Willie Cook, VP of Operations
DTS Worldwide Transportation & ZBest Worldwide Transportation in Burtonsville, Md.
I tend to be undercut not by my true competitors, but by those who see themselves as competitors, which is rather easily combatted by re-emphasising what we offer and what they simply don’t.
Martin Cox, CEO
Gerrard Cards in London, U.K.
In addressing the issue of being undercut by competitors, leveraging technology and AI can be a game-changer.
- Utilize AI for efficiency: Implement AI-driven solutions for route optimization, fleet management, and predictive maintenance.
- Enhanced customer experience: Leverage AI-powered chatbots and customer service platforms to provide personalized assistance, streamline booking processes, and promptly address client inquiries or concerns.
- Dynamic pricing strategies: Employ AI algorithms to analyze market trends, competitor pricing, and customer demand patterns. This data-driven approach enables operators to adjust pricing dynamically, ensuring competitiveness while maintaining profitability.
- Invest in training and development: Offer comprehensive training programs to chauffeurs, focusing on professionalism, customer service skills, and technological proficiency. Well-trained staff can deliver superior service, setting your business apart from competitors.
- Focus on value proposition: Emphasize the unique value propositions of your service, such as luxury amenities, safety features, and reliability. Communicate these benefits clearly to clients to justify premium pricing and differentiate your offering in the market.
Alex Darbahani, Founder/CEO
KLS Worldwide in Los Angeles, Calif.
We have many competitors in the Dallas market. Some are good, some are bad, and some are unethical. As it relates to price wars, for our client base, price is about the third or fourth reason why they choose a provider. We will never be the cheapest in town and will never race to the bottom to gain accounts.
Be proud of your rates: Have talking points as to why you are more expensive. Explain why you are better and that your higher price reflects all that you do to ensure timely, safe, and professional service. If clients leave, let them, and wish them well. They will be back—I promise you.
Eric Devlin, President/Owner
Premier Transportation in Dallas, Texas
While there are plenty of operators in my service area who low-ball prices, it is not something I concern myself with. The Ritz-Carlton could never operate with the budget of a Motel 6 because the clientele is different for each brand. Our targeted customers are discriminating travelers with more concern on luxury and service delivery versus price. When a customer tells us that a competitor is offering a lower price, I typically explain that just like hotel brands or airlines, the cheapest price usually indicates a lower quality of service. I always ask, “What is the experience you are looking for?”
Harry Dhillon, President
Ecko Worldwide Transportation in Santa Clara, Calif.
If there are instances where clients raise concerns about competitors offering lower prices, we address them by highlighting our unique benefits and superior quality. We focus on the long-term advantages that come with choosing quality over price, such as reliability, consistency, flexibility, and overall customer satisfaction. Additionally, we ensure transparency in our pricing structure, demonstrating the value proposition behind our rates.
We feel that our cost structure is our own and our goal is to reduce that cost structure wherever possible so that we can remain competitive. At the same time, we are committed to late-model equipment, well-paid employees, and a robust maintenance and technology platform. Those factors also help drive rates, regardless of competitor offerings.
Sean Duval, President & CEO
Golden Limousine International in Milan, Mich.
When faced with competitors undercutting prices, it is important to bring focus to the value and partnerships we have built with our clients. We stand by the quality of our service, the expertise of our staff, reliability, and a world-class level of customer service. This is a small sampling of the benefits of choosing an industry leader over simply going for the lowest priced option.
We communicate with our clients openly and honestly about our pricing structure and how it reflects the value they receive. We believe it is crucial to continuously benchmark our prices and practices against industry standards to back up this conversation and the value we offer without impact on the delivery of exceptional service. We study market trends, pricing strategies, and customer preferences to ensure our offering meets ever-changing client needs and requirements.
Raymond Gallagher, SVP, Sales & Marketing
RMA Worldwide Chauffeured Transportation in Princeton, N.J.
We thrive on being transparent with our clients. First, we inquire about the competition's offering to gain a clear understanding of their pricing and services. Based on this information, we may consider making a gesture of goodwill towards the client by adjusting our prices to be more competitive, although not necessarily matching the competitor's rates entirely. Simultaneously, we emphasize the quality of our services, highlighting our commitment to the highest standards and that peace of mind has no price.
Edward Ghebreal, Owner
Directway in Brussels, Belgium
We've earned the trust of our clients by consistently delivering exceptional service and maintaining the highest standards for our vehicles, chauffeurs, insurance, and compliance. Those who undercut prices often do so by sacrificing in those areas. We don't see these operators as our direct competition—our focus is on clients who value a premium, reliable experience.
Frank Jablonski, Owner
Lux Transport in Cleveland, Ohio
Educating the customer is, without doubt, the key to dealing with competitors undercutting your price. Our sales representatives are taught to ask as many questions as possible regarding the services and vehicles being offered by both sides of the transaction. This will consistently assist in making an apples-to-apples comparison. Confirm the specifics, convey the features, advantages, and benefits of hiring your company, and attempt to close the sale.
Len Joseph, President
On The Town Limousines, Frederick, Md.
Most operators starting out do not know the cost to do a ride from A to B or hourly. They price things low thinking the more rides they do, the more money to be made. This is a flawed approach. With our clients, I explain cost versus value to them. We are properly licensed and insured, with full background checks on all hires. Even with this process, we still lose work to bottom feeders.
Mark Kini, President
Boston Chauffeur in Beverly, Mass
I’ve observed a softening in demand in the Chicago market, leading to price pressures based on supply and demand dynamics. We position ourselves in a balanced price range, not the priciest nor the cheapest, providing flexibility when needed. While competition is fierce, building strong client relationships is our top priority, ensuring value beyond just price.
Stefan Kisiov, Managing Partner
K&G Coach Line in Park Ridge, Ill.
When we are speaking with our clients, we do not discuss pricing or validate the competitors’ pricing. What we do is provide information and educate the client on what we do and how we do it. We provide third-party verification on reviews and referrals along with the value of the relationship between our company and the clients we serve. The public doesn’t not want to be sold; they want to be serviced. We promise value and we overdeliver on that promise. Price is only an issue when we fail to provide the service we promise.
Gary McKeon, COO
Joshua's Worldwide Transportation in Gales Ferry, Conn.
Competitive pricing is common in the luxury transportation industry. To address this, focus on highlighting the unique value and premium service you provide. Emphasize quality, reliability, and personalized experiences to differentiate yourself from competitors. Regularly assess and adjust your services to stay competitive while maintaining high standards. We all need to invest and take advantage of the new technology and make the booking process easier for our customers.
Robert Rodríguez, President/CEO
First Class Destination Solutions in Carolina, Puerto Rico
Competing on price can be a difficult strategy to sustain, as it can lead to a race to the bottom and ultimately hurt profitability. We have managed to survive this by having the best service and easy booking tool. We also must remind the client that we have superior service and always stand behind that.
Jess Sandhu, Director of Operations
A&A Limousine & Bus Service in Kenmore Wash.
Undercut by competitors? With my continued investment in newer equipment, technology, and our clean look and feel, we aren’t playing in the same game, field, stadium, or even the same sport as our competitors. I don’t focus on what competitors do… my focus is on how we can do it better.
Quentin Shackelford, Owner
AllClassLimo.com in Wichita, Kan.
Don't worry about what others are doing. Know your numbers and determine where you need to be on the rate of a trip to get you to the profit you want. If you are higher than others, there should be a reason. Be the best in the business and command the rate you are asking. In the words of author John DiJulius, "Make price irrelevant."
Scott Woodruff, President
Majestic Limousine & Coach in Des Moines, Iowa
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.
[03.08.24]