You have just purchased your own limousine business. As the owner, it is up to you to determine fair, reasonable rates for your customers. Developing rates is not as easy as simply listing a price per hour.
While each limousine company will have their own unique rates, there are a few key tips that can help ensure you create rates that will allow profit, but are pleasing to your customers.
Limo rates are typically based off of hourly prices. Generally, the number of passengers or mileage does not affect your standard limo rate. Many limousine companies choose to set a specific hourly rate for a certain type of vehicle. For example, a standard town car may run $55-$65 per hour while a limo (or party) bus could be upwards of $300. This type of company anticipates the passengers to split the cost on their own.
Other limo companies will create a “per person per hour” rate. For example, for a stretch hummer seating a party of 15 people or more the charge may be $10 per person per hour. This type of company will want to know how many members are in a party to determine a price.
In order to compensate for typical automobile services and garage fees, most limousine companies will add in a surcharge fee. It is up to you to determine an appropriate surcharge fee. It may range from 5-10%. This surcharge can also help compensate for worker’s compensation fees that you will be required to pay. In addition to a surcharge that covers service and worker’s compensation, some limousine companies are now imposing a fuel surcharge. Typically a fuel surcharge is 5% and helps combat rising fuel costs.
A base gratuity is generally added onto the typical hourly rate. Most companies charge between 15-20% gratuity fees in order to allow their drivers a reasonable hourly rate and tip. It is up to the customers to add their own tip past the set gratuity fee. If a driver does exceptionally well, a customer may feel they deserve further tips.
A client may run over in a meeting or conference. You should set a determined schedule with overage fees. Overage fees are typically charged in 15, 30, or 60 minute increments. Some companies may even charge for a whole new trip. It is up to you to determine what is fair for not only your company, but your customers. If a trip only goes 30 minutes over the reserved time, is it fair for you to charge the customer for an entire new trip of 3 hours?
Tolls and Fees
Typically, the customer is responsible for any tolls or airport fees. When discussing rates, you should inform the customer of any toll roads they will be traveling or fees that airports impose to limousine companies.
Per Stop Fee
Some limousine companies will impose a per stop fee which could be anywhere between $15-$35 per stop. You may only decide to charge this for clients who require numerous stops.
Most limousine companies have a minimum reservation time of 3 hours. Therefore, if a customer only needs the limo for an hour, they will still be charged for three. In peak times such as the prom or during the holidays, there may be a minimum or 6 or even 8 hours. You can determine what times warrant longer minimum requirements.
Limousine rates will vary based on seasons and even days. For example, renting a limousine during Christmas or the prom will be more expensive then an average April afternoon. Also, weekday rates often differ from weekend rates.
Many limousine companies advertise a low rate and then surprise the customer with additional surcharges and fees. Although they may land those first initial customers, chances are their return rate will be low. A customer will most likely be upset to learn that an entire new trip was billed when they ran late in a meeting.
Be up front in providing your rates and ALL fees. Establish a “what you see is what you pay” type of rate chart. By being honest with your customers, you will in turn provide satisfactory service and begin to establish a client list. Customers will understand your need to impose fees. Be respectful and upfront with them.
How you handle your business in its early days will determine your future success (or failure). If you are interested in entering the limousine industry, contact the Tenney Group. They can provide an extensive listing of limousine companies that are pre-screened to fit your requirements. Start your new business off right by enlisting the help of experienced professionals.