The ride-hailing economy is going through a critical phase. Between rising costs and rigid platform commissions, the margin for error has been reduced to zero. Yet online, numerous articles continue to promise riches through simplistic calculations or risky tax schemes.
The reality on the ground is mathematical, not magical. To survive and thrive in 2025, you must not only be a good driver, you must be a rigorous manager. It all starts with one fundamental piece of data: your Kilometre Cost Price (KCP).
But be careful: calculating it «by eye» is no longer enough. Here is the professional method for finding out your actual costs and setting prices that will really make you money.
In a nutshell
The PRK is your «pain threshold». It should not be calculated solely on your total kilometres (Technical PRK) but on your billed kilometres (Commercial PRK).
The three pillars of profitability:
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The Empty Return Rate: A driver who drives 30% empty sees their cost per kilometre skyrocket mathematically.
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Choosing a vehicle: Driving a German diesel saloon car costs up to £371 more per kilometre than driving a Toyota electric or hybrid car (TCO), weighing heavily on net margins.
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The Binomial Method: For your private prices, do not charge solely by the kilometre. Include time to cover your fixed costs.
Breaking free from the illusion: PRK Technique vs PRK Commercial
The traditional method (known as «Monôme») involves dividing all your costs by your total mileage. This is useful for accounting purposes, but dangerous when setting your prices. Why? Because it assumes that every kilometre driven is sold. However, the reality of private hire vehicle logistics is that Empty Mileage Ratio (EMR).
Approaches, returns after off-centre journeys, and cruising: these «invisible» kilometres (between 25% and 40% of your activity) consume fuel and cause wear and tear without generating any revenue.
The formula that changes everything
You must distinguish between two types of costs:
- The PRK Technique: How much does it cost to drive the car 1 km?.
- Commercial PRK: How much should you earn per kilometre charged to cover the entire cost?.
Case in point:
You have a PRK rate of £0.80/km.
If you have a standard empty rate of 25% (you charge 75 km out of every 100 travelled):
Your actual cost price is not €0.80 but 1,06 €. If you sell a journey at £1 per kilometre thinking you are making a profit, you are actually losing 6 pence per kilometre.
Auditing your expenses: The «Premium» trap»
To calculate this PRK Technique (the base), you must add Fixed Costs (Insurance, Credit, Accountant) and Variable Costs (Fuel, Maintenance).
This is where a large part of your profitability comes into play: the choice of vehicle.
The idealised image of a chauffeur-driven car in the form of a black German saloon (E-Class, 5 Series) is often an economic trap.
- Modern diesel in the city: Emission control systems (particulate filters, AdBlue) become clogged in urban use, leading to costly breakdowns. Actual fuel consumption often stagnates at around 7-8L/100km.
- Hybrid/Electric efficiency: Field data shows that a Toyota-type hybrid (Camry/Corolla) or an electric vehicle (Tesla/Kia) offers a significantly lower total cost of ownership (TCO).
The verdict of the figures: Over three years, driving a premium diesel saloon car can cost ~35% more expensive per kilometre than a reliable hybrid, due to maintenance, fuel and depreciation costs. Ask yourself: does the «Saloon Range» price premium really offset these additional operating costs? Often, the answer is no.
Setting your private price: Switch to the «Binomial» method»
Once you know your commercial PRK (your floor price), how do you set your private sale price?
The mistake is to use a simple price per kilometre (Monôme method).
The problem: In traffic jams, you consume little fuel (variable), but you consume time. And time is money (your fixed costs: insurance, salary, credit, which run by the minute).
Professionals use the Binomial method for their quotes:
- Cost per kilometre (CPK): To cover wear and tear and energy costs.
- An hourly cost (CC): To cover fixed costs and your remuneration.
Practical tip:
For your private customers, do not just offer «€1.50 per kilometre». Calculate your quote by estimating both time AND distance.
Simplified formula: (Distance x Cost per kilometre) + (Time x Cost per minute) + Margin.
This is the only way to remain profitable in a congested city where a 10-kilometre journey can take 45 minutes.
Market reality: The imperative of private clients
This rigorous calculation highlights the harsh reality of applications.
With commissions ranging from 18% to 25% and fixed rates, the net hourly income of a «100% App» driver often hovers around the minimum wage once actual expenses have been deducted.
The application should be seen as a tool to fill orders and limit empty returns, not as your sole source of income. Sustainable profitability (net margin > 20%) can only be achieved by developing your own business, where you set your prices and control your logistics.
Warning: The illusion of mileage allowances (IK)
You will often read on the internet that the «ultimate solution» is to set up a simplified joint stock company (SASU) and use your personal vehicle to pay yourself mileage allowances (IK), net of tax and social security contributions.
Exercise extreme caution.
This arrangement is being scrutinised by the tax authorities and URSSAF (the French social security contributions collection agency).
- The risk of reclassification: IKs are designed for professional use. secondary. For a private hire vehicle operator whose main activity is this, URSSAF may reclassify these payments as «disguised salary», with a reminder of social security contributions (approx. 45%) and penalties.
- The burden of proof: In the event of an inspection, a simple meter reading is not sufficient. You must provide proof for each business kilometre travelled (date, location, customer).
- Abuse of rights: If the sole purpose of the arrangement is to evade tax, you may be liable to a penalty of 40% to 80%.
Our recommendation: For intensive activity, prioritise safety: company-owned vehicle (or rental), deduction of actual costs and VAT recovery (on eligible services and fuel). Do not risk your business on a tax gamble.
In conclusion
PRK is not just an accounting figure, it is a decision-making tool. It allows you to say «no» to a loss-making race, to choose the right vehicle (the one that is profitable, not the one that shines), and to build accurate quotes.
In a highly competitive sector, it is not the one who drives the fastest who wins, but the one who counts the best.
Glossary
Here are some useful terms to know and understand:
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PRK Technique: Cost per kilometre travelled (Total expenses / Total kilometres).
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PRK Commercial: Cost per kilometre invoiced. It includes the cost of empty kilometres.
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TCO (Total Cost of Ownership) : Total cost of ownership of the vehicle, including purchase, financing, insurance, fuel, maintenance, and resale value.
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Empty return rate (TPV): Percentage of kilometres travelled without a customer (approach, return, patrol).
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Binomial method: Pricing method separating the kilometre cost (variable) and the hourly cost (fixed).
