Pricing yourself right
You can have the best product or service, but if you are unable to sell it, there is no business. That’s why – especially if you have your own authority – you should learn about proper pricing for your service and how you can strengthen it.
Because loads are posted online, many owner-operators allow the customer – the broker – to set the price. Yet in most business transactions, the service provider sets the price, and the customer decides to pay it or not – or to negotiate.
So as an owner-operator – a service provider – you should have a written pricing structure in place. You should have multiple levels for shorter- or longer-mileage hauls, certain lanes or certain cities.
Bookkeeping software, available for a monthly fee on my website, among others, is one way to create a one-page report with everything you need to understand your income and expenses. It takes less than an hour a month to enter the data. The payoff is having the numbers at your fingertips anytime you need them.
All pricing should start with your operating expenses – what it costs to run the truck and trailer per mile. If you don’t have an accounting system that allows you to track income and expense on a per-mile basis, that is step number one.
Once you know how much it costs to run your operation, determine a profit margin – what you want to make above your costs. Do you want to make 60 cents per mile? Would you be happy with 50 cents?
With those numbers determined, you now can price your service and continue to fine-tune it. You may find that certain lanes are more expensive because of fuel or other costs. You may see that it’s harder to find good-paying freight coming out of certain cities or regions, so you may want to charge more to go to those locations. You may want to discount certain cities or lanes because you know you won’t have any trouble finding another load once you’re there – or simply because you like traveling in those areas.
Now, just because you set a price doesn’t mean anyone will pay it. The nature of the free market is that your competitors might outbid you.
That’s why you should market your service. Get your ideas down on paper: Where you want to haul, what areas or lanes are your specialty, what types of freight you like to haul, what makes you different from competitors. List things you do well, your special equipment or technology, your on-time record – anything that would benefit a broker or shipper. Ask yourself: If I were the customer, why would I choose me to ship the product? Would I be willing to pay extra?
Once you have your plan roughed out, hire a designer to create a business card and brochure, both printed and as a PDF image for emailing. Here’s a great website for finding freelancers for jobs like this: fiverr.com.
Yes, this is hard work, but it will make all of the difference in your business. Even if you are leased to a carrier, I recommend doing this now so that you get a better understanding of your operation.
As time goes on, you might see bigger opportunities and be prepared to take them.