The Situation: You’re the president of a big-rig trucking company and are struggling a bit with your pricing. Currently you charge a flat rate per mile, but some of your customers are complaining that your prices are high relative to your competitors and are threatening to jump ship. And somehow you’re still losing money month after month. How can you return to more profitable times while it seems that your already-high prices aren’t enough to bring you out of the red?
Answer: Applying his years of business analytics experience, Scott at Bliss B.I.T. performs a complete analysis of your costing and pricing methods. After interviewing your CFO and reviewing financial statements Scott learns that mileage is actually a poor indicator of what a particular haul is going to cost the company (and what should be charged). Some terminals are busier, which leads to more driver overtime pay. Usage of your tri-axle chassis is also more expensive to operate than its dual-axle counterpart. Finally, some customers request several stop-offs during their hauls, which ultimately drives up your cost.
Scott re-designs your pricing model to lower your base mileage rate so that it’s more competitive. He also implements new charges for the add-on services that cost your company money, yet are demanded by the customer. Now only your most demanding customers are paying premium rates while your most vanilla customers are paying a much more competitive flat rate. Profits rise and customers are satisfied.