1. Know Your Costs
You need to have a good understanding of your costs. You need to know exactly what your drivers are costing you, including employers NIC’s, pensions, training etc.
You also need a reliable fuel figure. The price you pay will fluctuate regularly, many a company have been caught out by reacting too late to fuel price variations.
You need to know your fixed and variable vehicle-related costs. The staff doing the pricing must have accurate information on the cost of finance for the assets you own.
You must have a good understanding of your overheads. It is good practice to look at your overhead as a percentage of operating costs. Then you can see if the percentage grows when compared to revenue.
2. Let the customer know about any possible extras in advance.
Put all possible extra charges in the quote from the beginning. There is nothing more humbling than having to go to your client with your cap out for extras that weren’t in the original quote. Demurrage, late cancellation, refused load, returned pallets etc. If you operate under RHA/FTA/BIFA etc now is the time to let the customer know. If they aren’t made aware, they haven’t agreed to them and you may drop yourself in the proverbial.
3. Take into account whether the job is only going to take part of a day.
You should bear in mind that you need to be honest with yourself on the likelihood of filling the rest of the trucks day. If you don’t think you can reload the vehicle then quote for a days hire. Always bear in mind that you may lose the job if someone comes along who can utilise their vehicle better. The customer will always want to only pay for part of the journey carrying their goods.
4. Your price should increase with increased restrictions.
Why? because with every restriction reduces your options to cover the job. If the vehicle needs to be 3m internal, you can pretty much forget using 90% of subcontractors to help you during peak. If you get an hour window and then the load gets refused, that will require more one to one management of the vehicle than say a 0800-1700 open booking. Open bookings are becoming increasingly rare but they open up a load of flexibility. A driver goes sick, a road closure on the route, a tyre blowout… on some jobs, this may mean the load fails and the load may even need to be returned to the supplier at YOUR cost. Expensive and damaging to your relationship with your customer.
5. Figure out how many days per year the vehicle will be utilised.
How many days per annum are you expecting the kit to be used? Divide your costs by the expected utilisation days. Be realistic with your predictions, better still look back at previous years for an accurate prediction.
6. Don’t be a busy fuel.
If you are being contracted into this price you must, and I mean MUST have a mechanism in place to account for fluctuations in fuel. In general terms fuel accounts for around a third of costs. If the price jumps from 1.00ppl to 1.10ppl (this sometimes happens in weeks rather than years btw) fuel has just jumped from 33.33% of your costs of sales to 36.67%. That’s a rise in your overall costs of 3.34% in an industry that regularly generates sub 5% profit margins, those numbers speak volumes.
7. Do not price on mileage alone.
Set a minimum starting tariff amount and stick to it. Whether you are moving one mile or a thousand there should be a minimum starting tariff included. The way to work this out is … if you allow two hours at either end, work out your direct costs, plus indirect costs plus your profit margin % for these four hours. Too many hauliers take on £100 jobs because they are only a few miles and don’t look at the time involved to do it.
I have a rule, if you could only do this job all day every day and fail to make money, don’t do it. Be careful what you allow to be seen as a ‘bigger picture’ job. I get that they are part and parcel of larger contracts but be if you let them, your customer will push and more of these on you and make you a busy fool.
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This article is useful to transport companies, haulage companies, logistics companies, general haulage companies, transport firms, haulage firms, logistics firms, general haulage firms, hauliers.
Apex Logistics Solutions Ltd covers Bedfordshire, Berkshire, Bristol, Buckinghamshire, Cambridgeshire, Cheshire, Cornwall, County Durham, Cumberland, Derbyshire, Devon, Dorset, Essex, Gloucestershire, Greater London, Hampshire, Herefordshire, Hertfordshire, Huntingdonshire, Kent, Lancashire, Leicestershire, Lincolnshire, Middlesex, Norfolk, Northamptonshire, Northumberland, Nottinghamshire, Oxfordshire, Rutland, Shropshire, Somerset, Staffordshire, Suffolk, Surrey, Sussex, Warwickshire, Wiltshire, Worcestershire and Yorkshire.