Start with your costs
No pricing model works unless you know what your work costs. Before pricing any fleet contract, know:
- Your labor cost per hour, including wages, payroll taxes, benefits and paid time that is not billed.
- Your overhead, such as rent, insurance, software, trucks, tools and office staff.
- Your effective labor rate, meaning what you actually collect per hour worked, not just your posted rate.
- Your measured times for common jobs and each PM service level, from your own repair orders.
The Bureau of Labor Statistics reports wages for diesel service technicians and mechanics, which can help you check your pay against national figures, but your own costs are what matter for pricing. See average diesel shop labor rate.
For the terms a contract usually covers, see fleet maintenance contract.
Model 1: Time and materials
The fleet pays the hours worked at an agreed rate, plus parts at an agreed markup.
Pros: Fair when work varies widely. Low risk for the shop. Easy to explain.
Cons: Harder for the fleet to budget. Can lead to disputes about hours.
Make it work: Agree on labor rates for each setting (bay, mobile, after hours), parts pricing, diagnostic time and approval limits. Itemize every invoice clearly.
Model 2: Fixed PM prices with repairs on time and materials
The shop sets a fixed price for each PM service level, usually with fluids priced by engine, and bills repairs found during PMs on time and materials after approval.
Pros: The fleet can budget its PM program. The shop is rewarded for efficiency. This is a very common model.
Cons: The shop carries the risk if a PM takes longer than expected.
Make it work: Define exactly what each service level includes. Price from measured times. Note what is excluded, such as repairs, tires and major components. See PM service cost for a semi-truck.
Model 3: Fixed monthly fee per unit
The fleet pays a set amount per unit each month, covering defined services, sometimes including certain repairs.
Pros: Predictable revenue for the shop and predictable cost for the fleet.
Cons: The shop carries more risk. If units are older or used harder than expected, costs can exceed the fee.
Make it work: Use this only when you know the fleet's equipment and history well. Define covered and excluded work precisely. Include mileage or hours limits, and a review clause that allows price changes after a set period.
Model 4: Hybrid and add-on charges
Many contracts combine models: fixed PM prices, time and materials repairs, plus set charges for:
- Service calls or travel for mobile work.
- After-hours and weekend work. See after-hours rates for mobile mechanics.
- DOT annual inspections under 49 CFR 396.17.
- Roadside response.
- Shop supplies and disposal.
State each one clearly in the contract and on your rate sheet.
Parts pricing
Decide how parts are priced and say so in the contract:
- Markup on cost, sometimes tiered so expensive parts carry a smaller percentage.
- List price or a discount from list.
- Fleet-supplied parts, with a clear policy on labor warranty when the fleet provides the part.
Core charges should be listed separately on invoices. See core charge.
Payment terms are part of the price
Fleets often expect net terms. Waiting 30 days or more for payment has a real cost: you have already paid technicians and suppliers. Build that cost into your pricing, or offer a lower price for faster payment. See how to handle net 30 fleet terms. Federal agencies generally pay within 30 days of a proper invoice under 5 CFR 1315.4, unless the contract says otherwise.
What to put in the contract
A clear contract prevents most disputes. Include:
- Units covered, with a method for adding and removing units.
- Services included and excluded.
- Rates and prices for each model in use, with the date they take effect.
- Approval process and spending limits.
- Response time commitments, if any, by type of call.
- Records the fleet will receive, which support the records motor carriers must keep under 49 CFR 396.3.
- Invoicing and payment terms, including late fees if you charge them.
- Price review timing and method.
- Insurance and liability.
- Term and termination.
Have a lawyer review your standard contract.
Setting the price: a step-by-step method
- Gather the fleet's data: unit list, ages, mileage, duty and maintenance history if available.
- Estimate the work: number of PMs per year by service level, annual inspections, expected repairs.
- Apply your measured times and costs to that work.
- Add your target margin.
- Choose the model that fits the risk.
- Test the price against the fleet's alternatives and your own capacity.
- Set a review date, usually after the first several months, to compare estimated and actual work.
Illustrative example
The scenario below is made up for illustration only. A shop quotes a smaller fleet using model 2. It measures its own B service time on similar trucks, multiplies by its bay labor rate, adds oil and filters by engine at its parts price, and lists a flat supplies fee. It quotes repairs at its posted rate with a written approval limit, and adds a travel charge per stop for mobile PMs. After three months, it compares actual hours with the estimate and adjusts the PM price at the agreed review.
Explaining your price to the fleet
Fleet managers often need to justify a vendor's price to their own management. Make that easy. Show the price broken into labor, parts and fluids, inspection scope and travel. Explain what the fleet gets for the price: measured inspections, complete records, response commitments and same-day invoices. If your price is higher than a competitor's, say plainly what is included that the other quote may not cover, and let the fleet compare line by line.
Pricing for different fleet types
Pricing needs vary by fleet. A local delivery fleet with many identical trucks suits fixed PM pricing, because the work is predictable. A construction or vocational fleet with mixed equipment may suit time and materials better. A municipal fleet buys through a formal process, and its solicitation may set the pricing format for you. Match the model to the fleet instead of forcing one model on every customer.
Handling price changes during the contract
Costs change during a contract. Parts prices, wages and insurance can rise. A review clause lets both sides revisit prices on a set date, using real data from the contract so far. Give the fleet written notice well ahead of any change, show the reason, and apply new prices only from the agreed date.
Reviewing contract profitability
Review each fleet contract regularly:
- Revenue and gross profit per unit.
- Actual hours compared with estimated hours.
- Days to payment.
- Comebacks and warranty work.
If a contract is losing money, use the review clause to adjust prices or scope, or decide not to renew.
Common pricing mistakes
- Pricing below cost to win the contract.
- Vague scope that leads to free extra work.
- Ignoring travel time on mobile contracts.
- No review clause on fixed-fee contracts.
- Forgetting the cost of waiting for payment.
How MetaFleet helps
MetaFleet supports estimates, invoicing with per-customer terms printed on every invoice, reports for reviewing work by customer, and QuickBooks sync. Get a walkthrough.