Think, “that’s impossible”? It isn’t. Here’s a simple example.
I was vacationing on an island just recently and needed a taxi at 6:30 AM to get to an early boat.
There is only one taxi service on the entire island. When I called to make a reservation, here’s what I was told:
“We only start pick ups at 8AM. Sorry”
Wow, what a missed opportunity. These folks are sleep-walking. If you owned that taxi service, here’s what I’d advise you to do.
Pricing Tip #1: Charge a premium before 9AM and after 6PM.
Remember in our most recent post, Pricing Tips to Make More Money, we said every hour of the day does not have the same value? It doesn’t.
Hours before 9 AM or after 5 or 6 PM have premium value because they cut into your personal life. Even demanding clients understand this.
So if you are a service business and usually charge $X for a service during a normal workday, if someone needs you before or after that normal work day window, charge 2X for it.
Some people will scream. Others will walk away. Some will actually pay the freight.
Pricing Tip #2: Charging double at peak or inconvenient periods means you work less and make more.
If you owned that taxi service, instead of charging the normal $12 for the three minute ride to the ferry (yes, that’s all it was), you should charge $24 at 6:30 AM.
If the taxi service told me this, I would have paid it. In theory, you could work half the time and make the same amount of money.
Pricing Tip #3: Charging double in peak periods turbo-charges your per hour value.
Let me show you how it would be worth it to lose a little sleep to accommodate an overworked college professor:
- $20 for 3 minutes worth of work. This equals $400 per hour.
- Why? In theory, you could pick up 20 passengers within that sixty minute time frame. $20 X 20 passengers= $400.
- $1.00 worth of gas to drive 1 mile per passenger or $20 per hour.
- That leaves you, the taxi driver, with a net equivalent of $380 per hour for your time if you’re the driver.
When was the last time you found work that could pay you $380 per hour in the middle of a recession?
Pricing Tip #4: If your gross margins are high enough because you’re charging more, you can afford to hire someone to help you.
The other option is you could hire a driver to work the graveyard shifts, pay them double their normal hourly rate, say $15 per hour, and you’d still have $365 profit AND get a good night’s rest ( you have to pay for gas).
You might consider losing a little sleep to make $380 an hour, no? And if you’re like this taxi driver and you’re the only game in town, price like you are.
Takeaways
- And if you were the taxi owner who was willing to make those pick ups before the sunrise, you could work half the time and still make the same money.
- Or, you could work the same number of hours and double your income.
- You should test these assumptions. If a client wants the project done faster or if it requires working beyond normal working hours, charge a premium.
- Then email us and let us know how much more money you’re making!
