How to Take Advantage of the 10.00pm Closing Rule and Recover Lost Revenue for Your Drivers…

The government’s announcement that all pubs, restaurants and takeaways must close at 10pm is a setback for hospitality and taxi firms.

But while that might take away some of the late night business you’re used to winning, it also leaves you with an opportunity as demand for fares in that 10pm window are set to increase considerably.

Dynamic pricing opportunity… 

Better known in the taxi industry as surge pricing or price surcharging, dynamic pricing is prevalent in every part of society these days from flights to hotel rooms to taxi rides.

Even Happy Hour at clubs and pubs is a form of dynamic pricing.

So, what exactly is dynamic pricing?

According to Wikipedia…

‘Dynamic pricing, also referred to as surge pricing, demand pricing, or time-based pricing is a pricing strategy in which businesses set flexible prices for products or service based on current market demands.’

Wikipedia has more to say about dynamic pricing in the taxi industry…

‘Dynamic pricing is also used by Uber and Lyft. Uber’s system for “dynamically adjusting prices for service” measures supply (Uber drivers) and demand (passengers hailing rides by use of smartphones), and prices fares accordingly.’

Don’t make the same mistake as Uber…

Of course, Uber has famously scored some spectacular own-goals with its early dynamic pricing attempts.

They took a lot of flak in 2013 when they increased prices eight fold during storms in

New York.

And Uber had to apologise after surge pricing kicked in during the December 2014 hostage crisis in Sydney, Australia.

But despite this bad press, dynamic or surge pricing in the taxi industry is here to stay and if operated correctly, can help you make the most of this latest lockdown move, helping to recover lost driver income.

Dynamic pricing – making it Work 

Having the ability to introduce a modest surcharge for the new 10pm peak time is easy with a modern booking and dispatch system such as iCabbi.

Assuming you apply just a very modest £2 surcharge to each booking for jobs from 21:30 onwards on Saturdays, one of your drivers working an 8-hour shift from then and doing 3 jobs per hour will bring in an extra £48!

That’s an extra £200 per month per driver.

If they work that shift Friday AND Saturday nights, then they’ll make an extra £400 per month.

Experiment and listen to your customers…

The key to this opportunity is to experiment with the amount you surcharge by and listen to your customers.

Because of the widespread use of dynamic pricing with businesses such as airlines and hotels (and now taxis), customers have become used to this way of buying products or services.

In fact, research shows that passengers rarely complain about small fare surcharges at peak times.

That said, you will quickly discover what your customers will and won’t tolerate, so be ready to adjust your surcharge accordingly.

With a system like iCabbi, making a change is easy and instant so you always have complete control over your fare pricing.

If you have questions about dynamic pricing for your business or about iCabbi, please contact our friendly team of expert advisers any time by calling 01623 44 22 11, emailing us or by contacting us via our website.