Flat Rate vs. Hourly Rate

I think Excelsior Limousine Service is one of the few limousine companies in Los Angeles that still offers flat rates to and from the airport.

We offer the flat rate option to our corporate clients. The idea is that 95% of their trips are to and from the airport and I think deserve the discount. We only offer the flat rate for our town cars.  Specialty vehicles like the SUV's or limousines are charged by the hour regardless of what type of trip they are used for.

Flat Rates are less expensive, but they come with general rules. A flat rate is based on a pick-up at point A and a drop-off at point B with a reasonable amount of wait time at the pick-up location.  When picking up at your home, for example, the grace period we give is fifteen minutes. We give a half an hour of wait time at the airport. There is also a ten to fifteen dollar charge for each additional stop depending on the length of time of the stop and how far out of the way the stop may be.

After the grace period of wait time has passed you are charged $12.50 for each fifteen minute increment of time that passes beyond the first fifteen minutes.

You might ask, what if the plane is stuck on the runway, waiting for a gate to open and is further delayed?

I might ask, for example, what if the client decides to arrive into LAX during rush hour and it takes an hour more than it would normally take to get home? Should the client be responsible for the additional time? Although some of my peers would agree that the client should pay more, I do not!

When I decide on an amount to charge for that flat rate I've determined what the drive time would be under  normal circumstances and understand that there will be times when there is no traffic and we will get to the drop much faster and other times when we are on the road during rush hour.

So, going back to the question of whether or not the client is responsible for the time wasted sitting on the runway. Although, through no fault of their own, the wait time is extended beyond the half an hour, the client is still responsible. Why? Because it is completely up to the client to have the driver wait or to release him. That's sort of the "Flat Rate" catch or trade off.

If the client were paying an hourly rate none of this would matter. The client would start paying the moment the driver left the garage until the time he/she returned. In this case it would not matter if the driver waited an hour at the airport or of it took two hours to be driven home.

The flat rate certainly has it's advantages with regard to pricing, but it has some disadvantages with regard to timing and flexibility of the driver and vehicle.

As a corporate traveler which do you prefer?