Do you reduce your operational costs with a car rental software?
The answer to this question is obviously a resounding Yes, but the bigger question is how much does the software help you save? Can we quantify the savings from such a software?
Let us see if we can get to an answer in this post:
For the sake of convenience, let us take a car rental company that uses fleet management software and one that does not. Now, let us make some assumptions for both firms:
- Each has 100 taxis / cars
- Each has 50% utilisation
- There are an average of 5 rides per day for each car
- There are two dispatchers to coordinate in both cases
- For the firm with the software, the calculations happen automatically at the end of each ride and they do not have to hire someone to tally the numbers.
- For the other firm, let us say it takes one person one day to sort out the previous day’s billings and get the revenue figures. (We have given below how we arrived at this number.)
If we assume a fleet of 100 cars with 50% utilisation and the cars doing 5 rides per day, we get the number of bills as:
100 cars x 50% utilisation = 50 cars @ 5 rides per day = 250 bills.
Assuming 40 bills are taken care of every hour, this means all the bills are taken care of in 6 hours and 15 minutes, which is how much an average person works each day after excluding the breaks. (We know 40 bills an hour is a bit too much but since we have taken a larger firm with 100 cars instead of 50 or even 25, we think it is only fair to assume so.)
This means every month, the company with the car rental software is saving a person’s salary. If we assume the software license cost to be quite preposterous, say 50% of a person’s salary, then the company with the software is still saving at least half a year’s salary.
Now, according to Payscale.com, the average entry-level accountant’s salary in the US is USD 49,545 (it was USD 67,190 in 2015 according to usnews.com) while in Canada it is CAD 46,818. Let us assume the person who worked in the taxi firm was paid much less than that. In fact, let us assume he or she is paid USD 20,000 in the US or CAD 15,000 in Canada.
That means if the taxi firm with the software saves half of the accountant’s salary per year, it saves USD 10,000 or CAD 7,500.
And this is just the beginning.
With a fleet management software, you get to see your firm’s financial health on a real-time basis. The drivers also get to track what they are earning, whether they are eligible for a bonus, their routes, traffic, etc. In other words, life becomes easier. And the savings add up.
The calculation we did above was a very basic one and that too with assumptions that many of you, dear reader, may not agree with. But in our defence, let us say that we were interested in knowing what is the least amount any taxi service firm would save if they employ any good software and not just ours. And we think our back-of-the-envelope calculations are all right to begin with.
If you have any thoughts on this, please feel free to leave your comments below or on our Facebook or Google Plus pages. We are an emerging ERP and software development company with offices in India and Canada. We provide products such as education management software, gym management software, etc. in addition to software development and testing services, among others.