It is not unusual to see advertisements offering rental cars for $6.00, $8.00 or $9.00 per day and I have serious doubts in believing these prices are real. You know, if it looks too good to be true, it probably is. Let’s see, if a car is rented at, say $10.00/day it has a potential of earning $300.00 revenue for the month, however, since it is rented only part of the month, approximately between 75% to 80% of the time, we’ll assume 80% and say that the revenue for the month could be $240.00. Now this is well below the cost of the unit, which in addition has to include insurance and maintenance and other costs directly related to the car. So, are we to believe that car rental companies are willing to rent cars well below what it costs them? Really?
I can understand some special circumstances under which rates may be low as business may be slow at certain times and I also understand that competition, which could be fierce, may drive prices down, but to consistently rent cars below cost… that is not possible.
I have looked into these low rates and found out several things. When you enter the corresponding search words in Google you see advertisements at $7.00 a day, but when you click that option you see a totally different price. I just entered: car rental Wilmington (North Carolina) and selected the $7,00/day option and then realized that rates start at $21.00 and go from there. I also could see that the option I selected took me to a site which wasn’t a rental car company but offered to find car rental rates from other sites none of them a car rental company. So this is clearly an “internet marketer” which earns its revenue, I imagine, by sending clicks to other pages. By the time the actual supplier of the services gets my reservation I may have gone through three or maybe more sites that are serving as “middle man”. So the $7.00/day car does not exist in Wilmington, and then the rates we found are not necessarily from a car rental company but some other “middle man” offering the service.
I have also found car rental companies who do offer very low rates for special dates and places, as low as $5.92, but there are additional charges and surcharges that bring the rate to $15.70 and then I have to prepay the reservation. If later I want to make changes to the reservation I have to pay additional fees and if I don’t show up I lose all the money I have prepaid. And if I return the car early or late I have to pay additional fees, etc.
There are other instances of low rates where the small print requires me to purchase coverage, sometimes at very high rates, or the reservation is not honored. So I show up at the counter and then I am required to show proof of insurance, and not just any proof will do (the great majority of people fail to bring the proof of insurance required), failing which I am forced to purchase coverage at very high prices.
More and more airlines, car rental companies and the like are segregating the services they offer and charging them separately, as is the case of food on board the plane, checking in luggage, even selecting a seat, and others. This presents some advantages as one could manage to reduce the total cost of the service, but it requires a rather large investment of time spent in researching and reading different the conditions of each separate service. It has become increasingly more difficult to compare services and sometimes is not possible as the complete range of features offered may vary greatly from one supplier to the next. It is quite clear that this is a way to increase revenues as customers find it difficult to find the time to make the appropriate selection and the great majority just accept things as they are and pays more.
When we are given too many choices about what we want, it becomes a problem as we may forget to include that which we want and we may not quite understand the options being offered and then be disappointed later. This is what is happening with some of the service industries mentioned and similar others, where if you don’t ask, or if you don’t understand or read the small print you’ll be disappointed and will end up paying for more than you should.
One of the basic premises of free markets is that there are many suppliers offering the same service, however, suppliers make every effort to try and differentiate their service from the rest as they believe this will be to their advantage and in these efforts are included the “tricks” we see at play, such as offering “bait” rates, etc.
Of course there are other suppliers who don’t use of these tactics and offer their services in clear terms at what may seem at first as higher prices, and I for one, am one of those who prefer these suppliers. I have to say that in most cases the $6.00/day car may turn out to be the most expensive alternative, and that is why I normally go with someone who has a well-earned reputation for service and good rates and I’m rarely disappointed, if at all.