Friday, 24 January 2014

Pricing Engine – The Heart of a Car Rental Software

Looking back at the early 90’s car rental booking systems one may easily realize the dramatic changes that have occurred based on the increased needs of our days. A pricing engine of a system in the early 90s differs enormously compared to the pricing engine a system that is developed to face our times competitive environment.

In the 90’s the average car rental company had mainly three season rates, e.g. Low, Mid and High and these rates could be applied to a number of agents and were valid for an entire year.

The explosive evolution of the internet, the huge increase of people using the internet since the last decade came to change the rules of the game. Suddenly there was an explosive increase of users booking their car rentals through the web. They could find more attractive prices for a car rental online.  Car rental brokers had to modify their systems or die. Car rental companies had to start playing the match on a new ground – the Web. The game in this ground demanded a new way of thinking when it comes to pricing.

Building the pricing engine of our car rental software, Carhire Manager Web was one of the most challenging tasks in the entire project. We had set the following basic requirements.
  • Creating new rates had to be quick and innovative
  • Rate modification  had to be an instant process
  • The engine had to be extremely flexible in increasing or decreasing prices any time covering all possible
  •  It should be very clear which rates were applied to each agent
  • All the above should be possible with a minimum need of data entry.

When a user creates a new rate in Carhire Manager Web the system prompts the user to enter a name for the rate, number of seasons and number of scales.

Pressing the Create button redirects the user to a screen that reminds a Microsoft Excel spreadsheet. The user is now required to define

·        from date and to date . These two dates are referring to the submission period of the booking
·        from date and to date . These two dates are referring to the actual rental period of the booking

 The next step is to either enter the prices in this screen or just export the content to Microsoft Excel and do all necessary work and then import the Microsoft Excel spreadsheet back into Carhire Manager Web. The ability of exporting to and importing from Microsoft Excel provides a big amount of flexibility since the user may do all necessary calculations and recalculations using formulas, examining margins in order to decide the pricing. When ready the only thing that is required is a button click in order to import the result of this work back to the system.

A rate can then be applied to one or many agents. The agents and their assigned rates maybe viewed in a tree view styled screen.

For each agent we may define

  • Early bird discounts  -  Discounts for early bookers (one or many)
  • Flexible Rates  - Increased or decreased rates/ special offers (one or many)
  • Commissions – Commission payable to agent (one or many)
  • Free days – Free days offers (one or many)
Remember that a certain rate may be used by several agents but for every specific agent we may have different early bird discounts, different  flexible rates ( offers ), commissions  or free days. Hence this eliminates the need of creating constantly new rates. Please note that an agent using a specific rate may have a number of Early birds discounts or flexible rates assigned.

The pricing engine for a car rental software is like the heart for a body.  It is not my intention to go further into details and analyze the pricing engine because my aim was just to show the basic concept of the pricing engine of Carhire Manager Web.  This model provides an overall flexibility over the rate system and enables the car rental company to handle rates with extreme ease and to be highly competitive.

Andreas Michael

Carhire Manager Web 
Datalogic Consultants