The cost of a Limousine explained...

Just as in any reputable business many factors affect the cost of renting a limousine. On this page we point out the most pertinent items which determine the pricing structure of Limousine rental. Although pricing may vary from city to city, the following list remains constant throughout the world. Quality professional services do not cut corners for price competition. 

Equipment: First and foremost is the vehicle itself. The age and quality / condition of the Limousine is the most common factor affecting price. Limousines are not built by the major automobile manufacturers. In short form the base unit is purchased by a vehicle modifier (Coach Builder) through a dealer network. The base unit is then cut in half and modified into a stretched limousine. Several formulas affect the cost of building and purchasing a limousine. The most common cost cutting measure is to utilize lower cost, inferior components, in the assembly phase. Obviously using cheaper components results in a lower cost stretch. Unfortunately cheaper limousines usually break down more often affecting customer service. Limousine prices can vary as much as $12,000 per unit for identical size and amenities just based on production costs. Although most limousines can be functional for ten years or more. Most professional services update equipment every two to three years. Professional "customer orientated" Limousine Services typically operate better quality coaches for the purpose of offering more reliable service.

Safety; As a result of deficiencies in regulatory guidelines Coach Builders are not required to certify "modified" vehicles under FMVSS (Federal Motor Vehicle Safety Standards). In a nutshell this means their are very few safety standards applicable to a limousine. In recent years both Ford Lincoln / Mercury and GM Cadillac have incorporated programs to address safety standards. Respectfully labeled as Ford QVM ( Quality Vehicle Modifier) and GM CMC (Certified Vehicle Modifier), these program standards attempt to assure Limousine Services and passengers of safe reliable equipment. There are several items that these programs address but undoubtedly the most important are safety related. The most important consideration is vehicle weight and payload. Both Ford and GM have determined (by engineering standards) that Safety is compromised for any stretched Lincoln Town Car beyond 120" and Cadillac Sedan DeVille 130". Simply put the base units are not engineered to perform beyond these weight standards. In fact both auto manufacturers now void all factory warranties on any modified vehicle not conforming to program guidelines. The reason for this is that as a company they are responsibly responding to insurance coverage concerns. Certified vehicles cost more to purchase initially due to structural and component expenses related to "Coach Building". When choosing a Limousine one should consider how important is safety.

Maintenance; The cost of maintaining a Limousine is a major contributor to the operational expenses. Aside from the normal Oil changes and fuel costs there are several other key maintenance items associated with reliable operation. Many of these items are suggested regular maintenance for all vehicles that are largely ignored by the common vehicle owner. Most reputable Limousine services adhere adamantly to a maintenance schedule which surpasses the manufacturers recommendations. First and foremost is the fact that Limousines typically wear through brakes and tires as much as three times as fast as the "normal" car. Additionally a limousine is actually like two complete vehicles in one with regard to HVAC and electrical systems. These systems affect the performance and life span of many major components such as Compressors, alternators, regulators and or relays / system components. Beyond the mechanical maintenance is the appearance. The amount of time and supplies dedicated to the general maintenance of a professional livery vehicle is never ending. Simple items like washing, window cleaning, dusting and general interior cleaning are daily requirements. A livery vehicle must be thoroughly cleaned each and every time it is used. Normal vehicle preservation maintenance such as detailing, waxing, sealing, and carpet shampooing are performed at the very least on a monthly bases if not more depending on needs. When you hire a livery service vehicle it should be reliable and sparkling clean. The only way to assure the customer of receiving uncompromising service is to perform all the above and more maintenance accordingly.

Insurance; Undoubtedly one of the highest expenses in the livery business is livery vehicle and liability insurance. The cold hard fact is that when carrying groups of passengers a $300k liability limit is not adequate coverage. In addition to a minimum of $1,000,000 recommended liability is the vehicle value itself. A new limousine costs approximately 3 to 4 times that of an average car. Without detailing the reasons why (this page is long enough already), livery insurance costs are as much in one month as the average vehicle owner pays in one year. Their is no acceptable compromise to this cost.

Payroll; Each and every employee in the world has an associated cost. In the limousine industry those companies who choose to operate legally as an employer can expect payroll to eat up 30% of revenues. This  means that $0.30 of every dollar is pre-spent on employee wages, taxes, and associated employment insurances such as workers comp and unemployment. In addition these figures are exclusive of the cost of hiring a chauffeur to begin with. Miscellaneous expenses such as Credit check, physicals, drug testing, criminal background research, driving record and training add to these figures. The most common cost cutting practice amongst Limousine companies is illegal employment. Paying chauffeurs as independent contractors can give a company a 15% price advantage over "legal" services. Make no mistake the Federal Government has addressed this issue and has determined that in order for a Chauffeur / operator to qualify as an independent contractor they must have a vested interest in the profit and loss aspect of equipment ownership. As a tax paying customer one should consider that hiring a company which practices illegal employment for the purpose of price competition only costs law abiding employers and employees higher taxes.

Facility; A legitimate Livery service must maintain a business location. Most all municipalities limit residential businesses to no more than one commercial vehicle. This means that a professional, legally operated, full time service must have a building / office from which to operate. The costs associated with this are familiar to any person whom resides in a house or apartment. Most commercial buildings are either leased or owned. Either way the cost of rent / mortgage, taxes, maintenance and utilities must be paid somehow. Obviously these costs are reflected in the limousine hourly rates.

All the rest; Individually the other expenses associated with operations are each minimal percentages, yet combined, comprise over 40% of expenses. The list of "All the Rest" is far to extensive to explain here. One should surmise that nothing in life is free. The point here is that running an office is expensive. From the smallest expenses of purchasing staples and paperclips to paper and envelopes all the way up to Computer hardware and software acquisition and maintenance add up. A brief example would be Advertising, telecommunications (including wireless), legal fees, banking fees, postage, travel, et... et... Last but not least by any means is the point of running a business. Corporations exist for the purpose of making a profit. Just as each employed individual goes to work to get  paid companies are in business to make money. On average a reputable professional Limousine Service can expect a nominal 8% to 12 % profit margin excluding capital and asset depreciation / depletion.

Bottom Line; Legitimate professional companies can be price competitive to a point, however, the only way to offer low pricing is to cut corners. Paying chauffeurs "under the table" and operating inferior equipment is the most common practice for the "low price leaders". The "Bottom Line" is; Common Sense Consumer purchasing! "If it sounds to good to be true, it probably is". If your interest is to secure professional service for your event then do your homework and choose your provider based on quality not price.