On a recent business trip to Washington, DC, we used lots of Uber and Lyft rides. When we asked the drivers about their costs, the economics were interesting.
- “I pay $25 per day in fuel.” He was driving an older Toyota Camry. Question: how high are your operating expenses?
- “I pay $40 per week in fuel.” He was driving a new hybrid Honda Civic. Question: how low could your operating expenses be with newer technology or equipment?
Let’s do the math (hint: always do the math on any problem).
One pays $40 per week or $160 per month for fuel and is driving a new and comfortable car. The other pays $25 per day, or $750 per month for fuel driving an older, less comfortable, more worn out car.
The difference is $590 per month. For less than $590 per month, we could buy/lease/finance a newer vehicle that burned less fuel, had fewer repairs, and was more comfortable. And, we’d have more profit.
In your business, are you minimizing expenses or optimizing profits?