The job that looked profitable on paper
A corporate client books a three day tour. Four coaches, premium rate, accommodation included in the quote. The kind of work that should deliver serious margin.
You price it based on your standard calculation. Daily rate, fuel estimate, driver costs, accommodation. Add your margin. Send the quote. Win the job.
Three weeks later, when you close the books, the profit you expected is not there. The job made money, but far less than forecast. And you cannot quite work out where it went.
This is the silent profit leak. The gap between expected margin and actual margin on private hire work. It happens on almost every job. And most operators never identify the cause.
Where the margin actually goes
The price you quote is based on assumptions. Standard fuel consumption. Estimated mileage. Planned driver hours. Average vehicle running costs.
Reality is rarely standard.
The route had more motorway mileage than you estimated, increasing fuel costs. Traffic delays meant drivers went into overtime. One vehicle needed a tyre replacement mid job. The customer requested a route change that added 60 miles. The accommodation cost more than your initial research suggested.
None of these are large costs individually. Together, they consume margin. A job that should have delivered 18% profit delivers 7%. You still made money, so it feels acceptable. But you just left 11% margin on the table without knowing it.
Multiply that across 200 private hire jobs a year, and the lost profit becomes material. Enough to fund another vehicle. Or hire another driver. Or build a cash reserve for fleet investment.
The costs you do not track are the costs that destroy margin
Most operators track the obvious costs. Fuel. Wages. Vehicle purchase or lease. Insurance. Maintenance.
Very few track the operational costs that sit between those major line items.
How much does it actually cost per mile to run each vehicle type in your fleet? Not the manufacturer’s estimate. Your real cost, including wear, servicing, unscheduled repairs, tyre replacement, and depreciation.
How much does driver overtime actually add to job costs when delays occur? What is the true cost of positioning moves when a vehicle needs to travel empty to the pickup location?
How much does admin time cost when a job requires coordination across multiple drivers, vehicles, and suppliers?
These are not hypothetical costs. They are real cash outflows that reduce your profit. But if you are not tracking them per job, they remain invisible. You see the revenue. You pay the obvious bills. And the margin quietly evaporates in a dozen small places you never measured.
Route profitability reveals the truth
Two private hire jobs can have identical revenue and completely different profitability.
A 200 mile round trip on motorways with one pickup and one drop off is far more profitable than a 200 mile route with six stops, narrow village roads, and city centre traffic.
Fuel consumption varies. Driver time varies. Vehicle wear varies. The risk of delays varies. But most operators price both jobs the same way: standard daily rate plus mileage.
The result is predictable. Some routes are highly profitable. Others barely break even. But because you are not measuring route profitability, you cannot tell which is which.
The operators who track this data price differently. They know which types of work deliver strong margins and which do not. They adjust quotes accordingly. They say no to work that cannot be made profitable, even if it fills the diary.
This is not luck. It is visibility.
Fuel, wages, and hidden costs compound quickly
Fuel is the most visible cost. It is also the most volatile. A 10% increase in diesel prices can erase margin on long distance work if you have not built contingency into your pricing.
Wages are predictable, until they are not. Overtime, delays, positioning moves, and multi day jobs all increase driver costs beyond the standard calculation. If your pricing does not account for this variability, you are absorbing the cost instead of passing it to the customer.
Hidden costs are the real killer. The service that was due next month but had to be done early because of mileage. The toll road you did not include in the quote. The parking charges at the venue. The admin time to reschedule when the customer changed the date.
Individually, these are minor. Across a year of private hire work, they add up to thousands. And because they are not tracked per job, they are never priced in. You are giving away margin on every booking without realising it.
Margin protection starts before the quote is sent
The job that felt profitable in the diary but ruined the month in the accounts is not bad luck. It is the result of quoting without knowing your real costs.
The time to protect margin is not after the job. It is before you commit to the price.
Operators with proper cost visibility build quotes from real data. Actual vehicle running costs per mile. Accurate fuel pricing. Driver costs including contingency for delays. Route specific variables like tolls, parking, and positioning moves.
They do not guess. They calculate. And they price accordingly.
This does not mean being expensive. It means being accurate. A quote built on real costs can be competitive and profitable. A quote built on optimism is usually one or the other, never both.
The operators who protect margin are the ones who know their costs before the customer knows the price.
The most profitable operators are not the busiest. They are the most precise.
You do not need to run more jobs to be profitable. You need to run the right jobs at the right price.
Private hire work is high value, high margin potential. But only if you track the costs that destroy profitability. Only if you measure route performance. Only if you price based on reality, not estimates.
The silent profit leak is not loud. It does not show up as a crisis. It just quietly reduces your margin, job after job, year after year.
Until you measure it, you cannot fix it. And if you cannot fix it, you will stay busy but never truly profitable.