Matrix pricing solution offers real benefits

Fleet operators are seeing real benefits from the use of Fleet Logistics’ matrix lease pricing solution, including no end-of-contract charges or contract re-calculations, complete transparency, improved cash flow and potential savings over the life of a vehicle.

Fleet Logistics devised its matrix solution to help fleet customers ensure competitiveness across the entire life of a vehicle contract. The pricing is given at the start of the contract for all possible contract amendments and therefore fixed from the contract outset, in the event of recalculation mid-term, at the end of contract or if terminated early.

The majority of Fleet Logistics’ clients now enjoy the benefits that accrue from using the matrix pricing model.

Leasing rental recalculations can be quite common during a vehicle’s life and arise from a variety of reasons such as employees leaving the company, redundancies or company restructuring and vehicles travelling greater mileages than originally envisaged.

The Fleet Logistics pricing matrix is a forecasting grid that obligates a supplying leasing company to pre-determine rental costs based on each individual vehicle order, for a variety of contract durations and mileages.

Typically, these are for intervals of three months from 12 months to 60 months in terms of contract duration and for mileage intervals from 10,000 to 150,000 miles in 5,000 mile increments in terms of mileage.

The leasing company produces a grid of prices for every contract period and mileage which are then typically applied to cars that have been on contract for at least 12 months, and to those that have more than six months left on their contracts.

Every new car delivered through the Fleet Logistics matrix pricing model has this pricing matrix assigned to it, which allows for fine recalculations at any point of the contract for a known and pre-agreed cost and without any room for change.

The matrix pricing solution brings a number of benefits for fleet clients. Perhaps the most obvious one is that it provides a visibility of costs at any point through the contract of the vehicle, covering every eventuality. It is 100% transparent from the contract outset as costs are pre-agreed.

It also allows for real time accruals so that a client can proactively manage their costs without the fear of an expensive excess mileage charge at the end of the contract or relying on a pooling agreement.

The matrix pricing solution also helps provide cost comparisons without the need of re-quotations for the leasing company, so that the fleet client can easily see if they are using the most cost effective contract period and/or mileage interval.

Fleet Logistics typically utilises the matrix pricing model within its multi-bidding solution which utilises a panel of preferred leasing companies to competitively tender for each new car to be added to the fleet.

Multi-bidding has been shown to drive down acquisition costs by at least 8-10% for fleet clients by only selecting the most price competitive quote for each new vehicle. And, by insisting on the introduction of the matrix pricing grid at this stage, Fleet Logistics is ensuring that there are no surprise hidden costs for its clients further down the line.

The matrix pricing solution also provides several benefits to the supplying lease company. The most obvious one is that it reduces the administration involved around operating the contract as there is no need for ad hoc and often time-consuming recalculations during the life of the vehicle.

The main areas for using the matrix are typically mileage or contract period recalculations, end of contract reconciliation and early terminations, when its use provides complete transparency to the negotiations for each side and to budgeting.         

A Fleet Logistics spokesperson commented: “Applying a pricing matrix model in this way ensures the most relevant price for the client and generates a more positive cash flow and real time savings, in many cases, for each vehicle. These savings are then clearly shown in return on investment calculations and highlighted in our quarterly reporting so the client can easily quantify the amounts involved.

“Our matrix pricing model also benefits budgeting and forecasting for fleets at this present time if they need to scenario plan for changes due to the impact of coronavirus.”

If you require any further information or advice on this topic, please contact info@fleetlogistics.com or visit www.fleetlogistics.com