Supply and demand in the taxi business

When it comes to supply and demand, many taxi business owners seem to be focused on demand. My phone rang. My phone didn’t ring. That’s demand.

What they are forgetting is that there is another piece of this equation, the supply.  You can influence demand also by limiting supply or by creating a lot of supply.

For example, one way to limit supply would be to have only one car, a VIP car, or some kind of service which is available only to X people.

On occasion one of the best things you can and should be doing is drive your best clients yourself.  It positions you as a celebrity.   It’s like when the chef at the restaurant brings your dinner to the table. The supply here is obviously very limited – there’s only one you.

Think about when you go to a restaurant and a regular waiter brings your food, as opposed to when the chef or the owner brings it.  Having a chef come to your table and talk to you leaves a completely different impression.  There is a totally different feeling–and you have a story to tell others later on–even though the food and the amount you paid for it was the same.  In the taxi business we can easily replicate this idea.

When you, the owner of the company, are driving someone, it’s important to make sure that you are letting people know about it.  You should be giving rides to your best customers, to your most affluent customers, to those who spend a lot of money with you.

That is one of the ways to make them feel special and, again, this can be part of a membership package.  For example, the client gets X number of rides with the owner, along with being “first in line;” or, the owner drives two days a month and on those two days the client can ride with the owner of the company.

If we are dealing with senior citizens, you can say that we have specially trained drivers.  There is a limited number of those drivers because they are specially trained on how to provide great service to senior citizens.  If you have two specially trained drivers and 10 people who want rides from them, the price immediately goes up.

Again, the strategy is to look at demand and supply.  See where you can limit the supply.  This will let you create a line of customers and charge higher prices.

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