Want to start making more money in your taxi business instantly? Raise your prices! (Provided, of course, that your prices are not regulated by the government. And even if they are, most likely you can still charge whatever you want for out-of-town rides).
Suppose your current margin is 5%, meaning that on a $10 ride expenses are $9.50 (salaries, office, cars, insurance and so on) and 50 cents go into your pocket. Now suppose you increase you prices by 1%, from $10 to $10.10.
This doesn’t do anything to your expenses, so they stay the same.
Now let’s take a look at what happens to your pure profits. Before you were making 50c, now you are making 60c. That’s a 20% increase in pure profit!
1% PRICE INCREASE LEADS TO 20% INCREASE IN PURE PROFIT!
Similarly, if your current margin is 10% and you increase the price 5%, you will increase pure profits by 55%.
Will your clients leave if you raise the prices? If you provide great service, 1% or 5% is not a big enough increase for them to do so. Even if some of them leave, you will be making more when providing service to fewer amount of clients. This completely makes up for the clients that you lose.
Want step-by-step instructions how to become different from competition, so that you could increase your prices, be making more and have a ton of business? Check my Taxi Business Transformation Program to learn how you can do all this and more in your taxi business starting today!