How to increase your profit margin in a taxi business

Adequate fleet management plays a key role in maximising the profitability of any taxi company. Managers can make their taxi business profitable by ensuring the vehicles are well maintained and efficiently utilised.

Here are a few ways to guarantee your taxi business profits from your fleet of private hire vehicles:

Regular vehicle maintenance

Staying up with regular maintenance and service checks keeps your vehicles running efficiently and helps you avoid repair costs in the future. By adopting a proactive approach, your business can operate without interruption.

Bonus read: Vehicle Checks For Uber Drivers

Analyse vehicle usage

Take note of the vehicles in your fleet and how much they are being driven. Ideally, you want the cars to have the same amount of mileage. Aim for a balance among the vehicles to save you from excessive repairs and costs related to wear and tear.

Using a taxi booking app streamlines operations, increases driver efficiency, and makes bookings easily accessible for customers. This will increase revenue and improve customer experience, resulting in more profits down the line.

Here’s how to leverage booking apps and technology to increase profits:

Aim for convenience

Your own taxi app solution should be simple and have user-friendly features, ensuring your customers need to apply minimal effort to use your services.

Here are some features you can include to make your app convenient:

• Information about your pricing
• Driver information
• Online payment options
• Easy cancellation
• Customer feedback
• In-app communication between the passenger and driver
• Location approximation software
• Real-time vehicle tracking

Automate dispatching

Automated dispatching via an app allows drivers to be directed to the nearest fare. This is convenient for the customer and will increase revenue for the company by optimising vehicle use, streamlining the process, and increasing driver productivity.

Align the app with your company brand

Having your company brand, logo, and colours on the app will add to your business’s professionalism. If a business appears professional, they are more likely to be trusted and attract more customers.

Bonus read: Best Apps For Taxi Drivers

Decreasing costs in your taxi business is an obvious way to increase profits. But how exactly would you do this without compromising the quality of your service?

Fuel-efficient driving habits

Taxi drivers must be mindful of fuel consumption since it’s one of the highest expenses they face. Reducing this expense will make a huge difference in increasing profits – here’s how:

• Limit idling.
• Discourage drivers from excessive revving.
• Avoid rapid acceleration.
• Avoid harsh braking where possible.
• Do not tolerate speeding.

Reduce mileage by optimising routes

Taxi drivers should have a sound knowledge of the routes and road networks to ensure the most efficient routes are used. Use GPS or other navigational systems to avoid congested areas, road closures and delays due to accidents or construction.

Make use of telematics

If you are serious about increasing your profits, investing in telematics technology is the way to go. The real-time tracking and data provide valuable information that can be used to:

• Analyse the performance of your vehicle
• Analyse the driver’s habits
• Track fuel usage
• Identify areas for improvement in your operations

Taking out a telematics insurance policy is a great way to lower taxi insurance rates, as you will have proof of good driving habits.

Consider your vehicle choices carefully

Opting for vehicles with a proven lower fuel consumption will inevitably cut your taxi business costs.

Alternatively, you could leverage government incentives to purchase hybrid or electric vehicles. With the UK’s Net Zero policy, building up a fleet of electric vehicles will not only save on fuel costs but also open you up to the market of eco-savvy commuters.

Bonus read: Best Cars For Private Hire Taxis

Explore your insurance options

Another major cost in running a taxi business is insurance. The type of insurance you have will depend on the type of business you do.

Here are a few suggestions:

• If you are responsible for several vehicles, you’ll need fleet insurance.
• If you are a private hire driver, you’ll need private hire taxi insurance.
• If you are a public hire driver, you will need public hire insurance.

By opting for the cheapest taxi insurance, you will lower your overall operating costs and increase your profit.

Bonus read: How To Get Cheaper Taxi Insurance In The UK

There are many untapped markets that taxi businesses could enter into to increase profits. You are by no means limited to the day-to-day standard transport services.

Offer services to a niche market

Exploring taxi driver niche markets could be beneficial in your endeavour to increase your profits.

These include:

• School transportation
• Airport shuttles
• Courier services
• Transport for those with disabilities
• Group Transport
• Guided Tours
• Student transport
• Corporate transport

The market that will be most lucrative will depend greatly on where you are based. Speak to your local authorities to find out about opportunities in this sector.

Invest in vehicles that diversify your customer range

If you plan to enter a niche market, ensure your chosen vehicle is suited for the job. Investing in a vehicle that is suited to a larger group would widen your target market and enhance your taxi service offerings.

Just as you invest in and care for your vehicles, the same must be done for your drivers. Taxi drivers would have passed the basic training and assessments when getting their licences. However, encouraging your drivers to upskill will benefit your company. Consider offering reimbursements or contributions towards additional training, like:

• Advanced driving courses
• First aid courses
• Vehicle specific courses
• Business management courses

Offer courses and workshops

Your company could offer workshops that focus on different aspects of the job.

A workshop on soft skills would improve the quality of drivers’ customer service. On the other hand, a workshop on the stresses that taxi drivers face will provide your drivers with insight into taking care of their mental health and possibly deter any negative behaviour on the job.

Bonus read: Taxi Driver Problems And How To Deal With Them