Our Prices

Last week, a blog reader made a comment about our confusing taxi rates. Well, they are confusing! But rates are regulated meaning we are unable to change rates, we are obligated to charge the county rates, and we cannot compete based on lowering rates.

Where do taxi rates come from? Typically, to establish rates there is a long drawn-out process that involves: demographic and population research; company, drivers, and customer feedback; costs associated with vehicles, maintenance, and fuel; and, general economic research. Lawyers and lobbyists often get involved -- it's messy. With so many interest groups involved, the rates end up a little messy too.

What's also messy is the whole traffic time/distance confusion, and makes it tough for the company or customer to estimate the cost of your trip. This is where most of the questions that I receive come from. So, you get into a cab and the meter starts at $4. For each quarter-mile, the meter goes up by 50 cents, or $2 a mile. You would assume that a 5 mile trip would cost $4 + ($2 x 5 miles) = $14. But what if you sit in traffic for 30 minutes? Cabs are obligated to charge $28 per hour for traffic/delay time. This is sitting in traffic, or sitting and waiting for you at the Rite Aid. This burns more fuel, takes up a driver's time, depreciates the car, etc, etc.. Now you are up to $28 times 1/2 = $14. $14 plus your initial $14 puts you at $28. Even though you still traveled 5 miles.

Why are taxi rates regulated? The best answer I have come up with is that taxis cannot compete based on price because service levels and customer safety will deteriorate (yes, even more so than now, for all you nay-sayers..). Transportation can be lucrative, so companies or drivers will continue to undercut each other to get all that business. In the process of undercutting, there will be less money available for drivers and companies to keep cars safe, buy new cars, and develop the business. Companies may undercut, establish a monopoly, and jack up rates. Rates would probably fluctuate until they hit a sweet spot where price, safety and customer service all made sense. But the regulators say that they are better able to come up with that price.

Please remember is that it is not the taxi companies that set the rates and all the companies are obligated to charge the same exact rates. Our meters are inspected regularly to make sure all cabs in the jurisdiction charge exactly the accurate distance and time-based rate. I have attached a rate chart below that is reproduced on each of Montgomery County's cab fleet websites and cabs.