Written by Renzo Linares
In this article, we will explain the differences in pricing depending on the rental duration. We will also explain our policy of discounts.
1. Price based on duration
At The Extra Mile, we offer 2 main types of motorbike rentals. City rental and road-trip rental, each having a regressive price that lowers the daily rate the longer the rental is. This method is commonly used by rental services of all types, including accommodation rentals.
For rental businesses, the longer the rental is, the lower the daily price will be. Hence, for the lowest period, there will be the highest daily rate.
On city-rentals:
If the bike has a monthly price of 3,000,000 VND, it comes down to 100,000 VND per day.
For the same bike, we will charge 2,250,000 VND for periods up to 2 weeks, hence making it up to 150,000 VND per day.
Still, on the same bike, we will charge 1,500,000 VND for 1 week, hence up to 214,000 VND per day.
The daily rate (from 2 to 5 days) will have the highest rate at 300,000 VND per day.
In other words, for a bike of 3,000,000 VND per month, we charge 75% of the monthly value for a 2-week rental, 50% for a 1-week rental, and 10% for a day rental.
It is a misconception to believe that half a month would simply be worth half of the monthly rental. That thinking does not consider all the back-office labor time required to make the rental happen. As a business, we invest also in labor time and human resources, we do not only invest in the material part of the bike. This is important because the longer the rental, the lower the number of hours our staff are required to work for that specific rental. It seems to come as a surprise for many customers, but reaching a certain volume as a business rental time becomes a critical factor.
We do not accept 1-day rentals for city rentals, because when balancing the labor cost of serving a customer for 1 day only against 300,000 VND, we pretty much just break even and we are a business, so that doesn’t fly. As a result, we do 2 days minimum for city rentals. During a short rental, not only the labor time spent is higher in a shorter span of time, but we also need to do more frequent checks and maintenance which can result in bikes not being available for rentals for a few days.
As a conclusion, the city-rental pricing is scaled instead of proportional. Allowing us to run our operations optimally to provide properly maintained and ready bikes for rent.
On-road trip rentals:
Road-trip rentals are calculated in a completely different way. You may see on our website how the prices of road-trip rentals are higher than the daily rate of city rentals.
There are 3 main reasons for this:
- The number of kilometers driven during a road trip will easily triple or more the number of kilometers customers do when commuting in the city. As an average, we consider that city rentals will ride from 20 to 50 km a day. On a road trip in Vietnam, customers frequently ride 100kms to 200kms or more in a day. This evidently means that the bike is being used a lot more than in city rentals, hence the maintenance will be more frequent, parts will need to be replaced more frequently and the life expectancy of the bike will decrease fast. The road-trip pricing is then set based on the usual road-trip distances in Vietnam.
- Once you leave Ho Chi Minh City, things change drastically and quickly. The main issue is the condition of roads in Vietnam. Many provinces of Vietnam are poor and underdeveloped, and we can see it on the roads. It is not uncommon to end up on broken roads or even on off-road even when following the main roads. Tires are a main expense on motorbikes, and it is not an exception in Vietnam where harsh road and weather conditions affect the tires among other parts more than in other countries. The cost of maintenance will be higher in comparison to other countries with developed economies.
- Most of our road-trip bikes are imported bikes that require the importing of parts from Thailand, Indonesia, or others. These parts are subject to important shipping and customs fees (especially since COVID-19) and can become very pricey compared to developed countries. Due to currency conversions and changing market conditions, the maintenance costs of imported bikes vary a lot and are rising in the long term. We then need to respond to the market condition with prices that allow for sufficient maintenance with the correct parts.
Discounts for the length of rental can be offered depending on the season. From November to February, do not expect much flexibility as it is the high season and we run out every year. The rest of the year we can be flexible on long road trip rentals.
2. Discounts
We hear every so on “I will rent long-term; can you lower the price?”
Unfortunately, we are pretty much the worst business to ask that. In 2023, the record for the longest rental with our business is 5 years!
Here is some data about our customer base:
- 11% of our customers rent from us for over 3 years now.
- 9% rent for over 2 years.
- 28% rent for over 1 year.
- 5% are double rentals (a single customer renting 2 bikes or more.)
Logically, we set the milestones for discounts in a way that prioritizes our customers who rent the longest. These customers will receive the best benefits and the lowest prices. We like to reward loyalty, so we start offering discounts or extra benefits once the customer has reached a certain number of years of rental. A few months does not cut it, not even 11 months. Then, a second factor after the length of the rental is the value of the rental itself. It is more interesting for us to make a deal on a 6,000,000 VND a month bike rather than on a 3,000,000 VND one. So, the better the bike you rent, the better your chance is for new benefits or discounts.
Would you like discounts for long-term rentals? Reach out to us after renting for at least 1 year on a bike from our Prestige and Adrenaline collections, or 2 years for our Premium Commuters category. But, do not worry, that does not mean that you will not get benefits until then. The more loyal the customer is, the more care and attention we provide and add in some extras to make the customer more comfortable.