You own a trucking company or are an owner-operator, but that doesn’t mean you can’t think like an economist, right?
You are undoubtedly asking yourself, “what the heck does he mean by that?”
What I mean is that one of the quickest ways to make more money in a high demand market, like the one we are experiencing in the current trucking environment, with a shortage of trained and competent drivers, and shipping demand being sky-high, is to raise your prices. You think like an “Economist” – and you do this by understanding the Law of Supply and Demand.
What is the Law of Supply and Demand? Well it goes like this: if the supply of a given product or service (yours, for instance) remains constant, yet the demand for that product or service increases, the unit price for that will increase. And there you have it – your recipe to making more money by doing the same thing you’re already doing (driving and working), and you do that by raising your prices.
Raise your prices? Why? Because you can – since in today’s market, the demand drives the supply (which is you) so take advantage of it, raise your load prices in high demand areas or routes, and make more money doing the same thing.
So how do you raise prices?
Well, one way is to publish higher rates for your services to your current customer base, either through an Email or Newsletter. Another, more labor intensive way is to negotiate higher rates upfront, before taking on a new job or load. Fundamental to both methods, is that you establish new standards consistently across your services, to make sure your Customer’s understand how you arrived at the rate hikes, and that you aren’t doing it haphazardly or willy-nilly. Don’t forget to check on your competition – making sure your rate increases are consistent with those being practiced by the market. You don’t want to raise prices, and then come back and lower them because you went too high. That impacts your credibility – something you work too hard to give up easily.
So think like an economist, and understand the laws, not just on the highway, but of economics, and make sure you take full advantage of the current situation, which does favor you, and make even more money doing the thing you enjoy – working and driving.
Enjoy the summer and stay well.