Editor’s note: This op-ed for Bus & Motorcoach News is written by Brian Dickson, owner and principal consultant of Bus Business Consultants.
Most operators don’t lose money all at once.
They lose it a little at a time—through small decisions that, over time, add up.
The same is true on the other side. Profitability is rarely the result of a single change. It’s built through consistent discipline across the operation.
Drawing on experience in both large-scale and private transportation operations, a few patterns show up repeatedly. These are the areas where margin is most often won or lost.
Understanding your costs
Profitability starts with knowing your numbers.
Not estimates, not assumptions, but actual costs.
That includes driver wages and benefits, insurance, maintenance, fleet costs, and general overhead. But more importantly, it means understanding how those costs show up as a percentage of revenue.
Many operators can identify some of these numbers. Fewer can confidently identify all of them.
Without that clarity, it becomes difficult to know whether the business is truly performing—or simply generating revenue.
Pricing that reflects reality
Knowing your costs is only part of the equation. Pricing has to reflect those costs—and the realities of the work.
Time drives labor expenses. Miles driven, fuel, and maintenance, as well as trip-specific costs – tolls, parking, lodging – add up quickly.
But pricing isn’t something you set once.
Markets change. Costs change. Fuel changes. Labor changes.
And if your pricing doesn’t change with them, your margins disappear.
Once upon a time, many operators could review pricing annually. Today, it’s better to review it more often to make sure it still reflects your costs, the market, and the margin you need.
Just as important is understanding the market:
- Who your actual competitors are
- What they’re charging
- Where you fit
Pricing in a vacuum rarely works.
In one case, a long-standing shuttle contract appeared to be a solid piece of business – it ran consistently, the relationship was strong, and payments were reliable. But once the pricing was fully evaluated against actual labor, fuel, and maintenance costs, it became clear the work wasn’t profitable. Situations like that don’t usually happen overnight—they build over time when pricing isn’t revisited.
Execution in the field
Even well-constructed pricing falls apart without operational discipline.
If a job is priced based on a certain number of hours and miles, the operation has to deliver against that plan. When trips run long, changes go undocumented, or additional costs aren’t captured, the margin begins to erode. Not all at once—but consistently.
Operators don’t just lose margin in pricing.
They lose it in execution.
Fleet decisions and long-term cost
Fleet strategy is one of the most significant drivers of long-term cost. Equipment decisions—especially new purchases—lock in monthly expenses that must be supported by the work.
New equipment has its place, but it requires:
- The right type of work
- Sufficient margin
- Consistent utilization
In many cases, well-maintained equipment can perform just as effectively at a lower cost, particularly in local or shuttle operations.
The key is aligning fleet decisions with the work, not preference.
Pieces of the big picture
None of these areas, on their own, will make or break a business.
But together, they add up.
And when operators look back, these are often the inflection points—where performance began to change. The decisions made day to day – around pricing, operations, safety, and fleet – ultimately determine whether a company builds margin or loses it.
For a deeper look at six catalysts and how they manifest throughout the operation, check out the full article: The Catalysts of Profitability.
Photos courtesy of Brian Dickson
This column, “Where Motorcoach Operators Really Win—and Lose—Profitability,” was originally posted in Brian Dickson’s Ground Transportation Insights Substack. Brian Dickson is the owner and principal consultant of Bus Business Consultants.
