Per-kilometre pricing is convenient because everyone understands it. Customers, sales and operations speak the same language. But mileage doesn’t cover everything: there are also hours, waiting, tolls, fuel, maintenance, insurance, depreciation and idle time.
If your per-kilometre rate comes from ‘what people charge locally’, you leave your margin to the market. Start with your own numbers.
Calculate your actual base cost
Before pricing, separate variable and fixed costs. Variable costs grow with the service: fuel, wear, tolls and allowances. Fixed costs exist even when the coach stays parked: insurance, financing, accounting, rent and indirect salaries.
- Variable cost per kilometre: fuel, maintenance, tyres and wear.
- Cost per hour: driver, availability and waiting.
- Allocated fixed cost: monthly overheads divided by productive kilometres.
Don’t use every kilometre on the tachograph
The common mistake is spreading costs over every kilometre travelled. Not all of them generate revenue. Use productive kilometres: those allocated to paid services. Including unpaid empty running makes your cost per kilometre look lower than it is.
Your per-kilometre price must cover both paid and unpaid kilometres.
Include a minimum service charge
A short journey may involve few kilometres yet block half the morning. You need a minimum charge per departure, half-day or hours. Without it, short services fill your calendar and drain your margin.
Separate the selling price from the internal rule
Customers don’t need to see the whole formula. Internally, calculate using mileage, hours, empty running and margin. Commercially, offer an all-in price. What matters is that it comes from a rule, not intuition.
Adjust by vehicle type
A 19-seater, a 35-seater and a large coach don’t have the same costs or price elasticity. Create rates by vehicle family. If everything uses one average figure, some services subsidise others.
Review rates every month
You don’t need to rebuild the whole table weekly. But if fuel, tolls or wages change, your rates can’t wait a year. Review actual cost per kilometre, margin by service type and services below the minimum each month.
When to lower the price
Lowering prices may make sense to fill idle time, retain a profitable account or match a return with another service. The danger is lowering them because ‘otherwise we won’t win it’. That isn’t strategy. It’s exhaustion.
A carefully calculated rate per kilometre shows which trips leave a margin and which do not. That gives you a clear basis for negotiating prices and discounts.
