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I have been racking my brains over the most justful way in creating rates. I am starting off a slow operation with 2 vehicles and no other real overhead other then insurance, phone, web and advertising. Oh and my dear driver if I can find one.

How best do I create rates WITHOUT looking at the competition and creating them off those..

quote:

Originally posted by Ankur:
I have been racking my brains over the most justful way in creating rates. I am starting off a slow operation with 2 vehicles and no other real overhead other then insurance, phone, web and advertising. Oh and my dear driver if I can find one.

How best do I create rates WITHOUT looking at the competition and creating them off those..

Not knowing what your competition is doing/charging for like-services is a sure way to fail.

Your desired expense to income ratio may have absolutely nothing to do with what the market in your area will actually support.

Clearly, you have to know what you need a month to survive, but that number could either vastly undersell your services, or price you right out of the market if it is not in line with "the going rate."

People DO price shop, and being new with no name recognition or word of mouth buzz to make you stand out, you won't be able to make a go of it charging anything above the median rate.

"Know thine enemy."

quote:

Originally posted by Ankur:
I have been racking my brains over the most justful way in creating rates. I am starting off a slow operation with 2 vehicles and no other real overhead other then insurance, phone, web and advertising. Oh and my dear driver if I can find one.

How best do I create rates WITHOUT looking at the competition and creating them off those..

#1 Check what others in your industry are charging for that service
#2 See how much your costs are, and estimate how many runs you'll have
#3 Put the average rate to those run estimates per month, then see if that covers your monthly costs plus make a profit. If so BINGO you're in there. If it DOESN'T then you need to either charge higher rates, or reduce your costs

You can do it without looking at others rates but you may be pricing yourself too high or low.