How to Effectively Charge Customers for Travel Time

Tackling any topic related to rates is likely one of the most debatable areas to touch with a ten foot pole. Technicians are stoutly protective of their pricing structures when the discussion comes up. However, I’m admittedly adventurous in this realm and believe that the more open we are with effective ways to address travel costs, the better we can serve our customers in settings fees that are appropriate for both sides. I took a chance to address proper self-worth valuation when it comes to pricing a little while back, but let’s see if we can tackle travel costs this time around.

My goal here is not to say that my methodology is necessarily better; it works for my computer repair company FireLogic and I’m open to sharing it fully with fellow techs. The overarching goal with this article is to merely establish a friendly debate on all of the available methods for charging on travel, and weighing the pros/cons of each. There is no single method or rate that fits all technicians. We’re all disparate in our own ways: serving different communities, working with different customers, and operating within distinct socioeconomic regions.

The Technibble forums are generally host to some interesting discussion on travel fees and how to determine them. A few particular threads hosted some great insight like this one, a thread related to call out charges, and this discussion on how to charge for visits that are out of area. I’m going to admittedly pull a mixture of ideas from various forum postings below to give people an idea of what various techs have concocted to meet this growing need. Let’s take a look at the different ways you can charge your own customers for travel time.

The flat hourly rate

I’ll cover this one first since this is how FireLogic handles travel costs. I like this model because it’s simple for a customer to understand and doesn’t require any extensive tracking/recording besides time. My view is that if someone is willing to pay for us to travel out to visit them, a flat hourly travel rate properly compensates the tech that needs to make the trip and covers gas expenses. Our travel rate is currently $20USD/hr (about 1/4 of what our hourly onsite rate is) and has proven to be a happy medium for our customers and techs. We do not charge for return travel, as the notion goes that the next customer being visited will pick up the subsequent trip as their visit charge. Some forum goers admit to charging their full hourly rate for travel, which is understandable depending on your situation. Do your research before establishing anything, but for the Park Ridge and suburban Chicago area (USA) this system has been very successful for us with little customer pushback.

Enforcing minimum onsite service fees

This is an roundabout to charging outright travel fees or an hourly trip rate. In this method, you notify your customer that they will be paying, for example, a one hour minimum of service for the visit. More than a few techs on the forums prefer this approach as it keeps travel fees out of the customer’s sight, and also cuts back on excessive abuse of onsite labor for small tasks. From the consensus I could gather, it seems that rural techs tend to like this method as travel fees are frowned upon in such locales but customers take positively to this approach. I don’t think it would be a bad idea to use a hybrid approach of a travel rate with an onsite minimum. Again, your circumstances and competition’s methods will have a big bearing on your own attitude towards this model.

Staggered travel flat-rate fee

Yet another way to charge for travel is to create a graduated, or staggered, trip charge schedule that is based upon the number of miles from your home base to the customer location. The benefit of this model is that it directly segregates shorter trips from longer ones, and gives the customer an easy way to estimate their final total. However, the downside is that if traffic catches a technician, even a short 4 mile trip in an urban area could turn out to take just as much, if not more time, than a 10 mile journey in the countryside. I personally frown upon this model since I service the suburban Park Ridge region of Chicago, and traffic can be dicey depending on time of day and the direction of a customer location. For rural techs, this may be more appealing.

Charging “by the mile” based on a standard rate

A similar method as the staggered model above, but this one ties exact mileage or distance traveled to a standardized rate “per mile” or “per kilometer.” For the United States, I have heard of many techs tie their rate to correlate directly with the mileage rate used by the federal government. As with the staggered method, I don’t believe it fully takes into account the time spent traveling to a customer in busy, traffic-drenched areas. But for techs that want a simpler, streamlined way to present their travel rates to customers, this is about as clean cut as it gets. Tying your travel rate to the same as the government uses cuts down on arguments from clients because you can merely point them to the higher authority for why you charge what you do.

Utilizing different onsite vs offsite service rates

My company uses this notion for how our prices are set. For our case, it’s not directly to take into account travel costs. We differentiate hourly rates moreso because of the simple fact that when I am onsite, I am dedicated solely to that single customer. I cannot multi-task in any way like one can do in-shop or from their home office. For this reason, a different price is justified. But some techs claim that merely forgoing a separate travel fee and charging an inflated 20-30% of their regular rate is effective. The benefit is that you can mask your travel costs to the customer. The downside is that such a massive difference in rate may sway more customers than you wish to use your services at the “discounted” rate and stick to remote support or the like. Good or bad, it’s up to you to decide how this may work out.

Whichever method you ultimately decide to use, remember that doing some competitive analysis is always key to a rate structure that customers will be open to. You don’t want to blindly change your travel fee methodology without sniffing around to see what your local techs are charging, and how they are structuring their fees. Systems that may work well for rural areas are not always suitable for urban areas as I described above. Do your homework, reach out to some customers for their feelings, and make an informed decision. How you publicly account for travel expenses using any of the methods above may be just as important as what amount you charge a customer.

Feel free to post your own ideas or comments on what you think is the best way to charge for travel. What works? What doesn’t? Let us know!