The evolving nature of pricing styles in the limo industry
- Posted By: Limo Anywhere
Here at Limo Anywhere, we consider ourselves lucky to serve a variety of different types of operators. Small and large, sedan and specialty focus, retail and corporate focus – our 3,500 operator customer base has a little bit of everything. So while we’ve helped customers build and implement rate structures of all types, we can certainly attest that for many years, “zone-based” pricing was the the bread and butter of the limo industry.
In the age of TNCs, enhanced focus on ground transportation spend from travel managers, and blurring lines between the consumer use occasions for taxi and limo service, however, we’ve noticed that pricing structures are adapting as well. So, what pricing structures are we seeing used frequently in 2014?
1) Per-mile pricing
Once the near-exclusive domain of taxis, this type of pricing is gaining steam in the limo industry. And why not? There is an argument to be made that this is the most “fair” way to price, and certainly it’s easy for consumers to understand. Many regulatory authorities will only allow this style if the price is established beforehand, however, so be sure you quote the rate upfront if that’s the law in your locality (and frankly, this is a much better consumer experience).
2) Per-minute pricing
The limo industry has always had hourly pricing, but what about per-minute? It’s more common than you might think, and helps operators to be compensated for time and effort, in addition to mileage. Be careful though, especially if you operate in a city with heavy traffic – there are few worse consumer experiences in ground transportation than seeing an astronomical bill based on bad traffic outside of the consumer’s control.
3) Per passenger pricing
For years a popular choice with specialty providers, in the age of ride-sharing, this pricing style has come back into focus, especially for those providers with a customer base heavily skewed to retail. If you have street pickups (“hails”) or ride-sharing as part of your business, this can be a quite sensible way to price those products.
4) Zone-based pricing
The old reliable. What’s so good about zone-based pricing? If you’re operating an airport pickup or dropoff business, the taxi industry’s pricing models often make this decision for you. And as a consumer, it’s both simple and predictable. We have seen increasing use of hybrid models, however, with zone pricing used for airport business, and a per-mile option for point-to-point work.
While these are the four most common pricing styles in our experience, it will be interesting to see how ground transportation pricing evolves in the coming years. Either way, Limo Anywhere will be there to support your business’ needs.