How to Price Road Transport Services for Profit: Seeking Advice on Cost Calculations

After working for 30 years, Ramjee Somjee Dutt opted for VRS and started a courier company. He did very well in the first four years. Now, he is looking to expand his business and has decided to venture into road transportation between Chennai and Mumbai, and Mumbai and Delhi, as he believes he can succeed in this new venture. Before making a final decision, he has hired your Management Consultant firm, which was formed by you. Ramjee has requested your firm to calculate the pricing to quote his clients for these two routes, taking into consideration all costs involved. He aims to make a minimum profit of Rs 1000 per day per truck after covering all expenses.

Market Analysis and Cost Breakdown

Based on your analysis of the market conditions, the following information is provided:
- Vehicle cost: Rs 7 lakhs
- Depreciation: 15%
- Maintenance costs per day: Rs 150
- Driver's monthly salary: Rs 5000
- Attendant's monthly salary: Rs 3000
- Miscellaneous expenses: Rs 200 per day
- Driver allowance: Rs 125 per day
- Attendant allowance: Rs 75
- Diesel cost per liter: Rs 25

The vehicle gives an average...

Regards

After working for 30 years, Ramjee Somjee Dutt opted for VRS and started a courier company and did very well in the first four years. He is now looking to expand his business and has decided to venture into the road transportation business between Chennai and Mumbai, and Mumbai and Delhi, as he feels he could do well in this line. However, before making a final decision, he hires your Management Consultant firm, which you formed. He has requested you to work out the price to quote his clients for these two routes, considering the costs involved. He expects to earn a minimum profit of Rs 1000 per day per truck after meeting all expenses.

Market Analysis and Cost Breakdown

Your analysis of market conditions tells you the following:
- Vehicle cost: Rs 7 lakhs
- Depreciation: 15%
- Maintenance costs per day: Rs 150
- Drivers' monthly salary: Rs 5000
- Attendants' monthly salary: Rs 3000
- Miscellaneous expenses: Rs 200 per day
- Driver allowance: Rs 125 per day
- Attendant allowance: Rs 75
- Diesel cost per liter: Rs 25

The vehicle gives an average...

Regards