Some people may already know, but others are in the dark about a key fact within the car shipping industry. Over 95% of the time the customer will be working with a car shipping broker and not the actual truckers. The reason for this is because majority of the trucks on the road are small businesses. These truckers may only have one of two trucks within their business, they do not normally have websites and they are not a nationwide company. As a trucker in the car shipping industry they want to work a certain route or area and that is basically all they will do. For example, Trucker A owns his own auto hauler and he likes to transport cars between New York and Florida. So, he can help customer within that route, but nothing else. People like things being familiar so it is normal for a trucker to like to do the same route again and again because it is familiar to him and he can plan out other events with his or her family around the schedule they set forth.
This is where auto shipping brokers come in. A broker can gather customers from anywhere in the united States and find them the proper auto transport company that does their route. So, why does a broker charge so much for their work? It isn’t that hard.
Realistically, the job isn’t too difficult, but the overhead is what really makes for the costs that they have to dish out to the customers so high. Lets go over what a broker needs to perform their job properly and then we’ll dive in to the costs of each.
Auto Transport Brokers Costs
- Software for customer management
- Load Board to find truckers for their customers
- Office space, computer, phone
- Credit Card Terminal
- Federal Bond/Trust
We will start off with the software first. Majority of brokers use the same software called jTracker. It starts at $200 a month and this is where a broker can have a customer management system to perform their job quickly and professionally. Each employee costs an additional $50.
The next thing a broker needs is a load board to find right car movers. Nearly every company uses Central Dispatch to find the truckers. This starts at $79.95 per month for 30 vehicles to be posted per month and it goes up from there. Most companies are in the $250 or higher price range per month.
Next would be an office space, computer and phone. Sure, people can do this from out of their homes and many do unless they have employees. With employees you’ll need an office space which can be anywhere from $450 a month to $2000 depending on how much space you need. The computer can be a personal computer, but with employees you’ll have to provide a company computer which can cost $250 – $1500. Then a phone system is needed. Many just use their cell phones because they have unlimited minutes, but with employees a company will have to provide a phone system. Many within the industry use Ring Central for their phone system and it costs about $100 a month and then $5 per additional phone number.
A credit card terminal is a must have in this industry because that is how they get their broker fee from their customers. Most of these terminals are about $30 a month and then anywhere from 2% – 3% per transaction.
To be an auto transportation broker in the United States you have to have a Trust or Bond. Federal Regulations just passed a few years ago that requires brokers to have a $75,000 coverage policy. This runs companies about $350 a month to keep paying on it.
A website is another factor in this cost. A website to be built from scratch is starting around $750 and goes up fro there depending on how much “stuff” they need in the website, how “pretty” they want to make it and how good the developer building the website is. On top of building the website they will also have a server fee every month from a company like GoDaddy who will host the website for people to go to. That starts at around $5 a month for shared server or $150+ for a dedicated server.
The last piece of this puzzle is customers. Obviously a company needs customers. There are three ways to generate quality customers in this industry. A company can buy auto transport leads, they can perform their own paid advertising through Google, Yahoo and/or Bing, or they can pay a company to perform SEO services to generate their own traffic.
When a company buys leads they usually come in packages of 500 or 1000 leads per month and can run anywhere from $1 to $4 per lead. For this demo lets just cut it in half and say $2 per lead and this company is going to buy 1000 leads.
Also the company that does paid advertising is dishing out about $4 per click to their website. Statistically it takes 3 or 4 clicks to generate a lead. That means it costs that company $12-$16 per customer.
The last way a company can generate leads is hiring an SEO company which costs about $50-$100 per hour. A quality SEO campaign will be at least 20 hours per month, but great campaigns with be 40+ per month.
Lets Add This Up
Lets add this all up and see what a brokers monthly cost is. We will strictly just use a single person that has no employees to keep the costs as low as possible.
Central Dispatch $80
Home Office/Computer/Phone $100
Credit Card Terminal $30 + 2%-3% fee
Federal Bond/Trust $350
Website & Hosting $10 + cost of website
That means this company has a total cost of $2,770 + the cost of website + 2%-3% credit card fees.
If this broker is going to make money to live and provide for their family they will have to do some great work. So, a normal conversion rate on theses leads he is buying is about 5%. If he purchased 1000 leads he actually booked 50 of them. A normal broker fee is anywhere from $150 – $200. So this means that this company grossed $7500 or slightly higher. Then minus the monthly costs the grand total this company made was $4,730 ($56,760 per year before paying taxes).
Now Do You Understand?
Now do you understand why brokers charge you $150 or more for their services? These people work 40-80 hours a week to make sure their customers are taken care of, but also because they need to provide for their family. So, next time you complain about a broker charging you $150 for the deposit, please don’t be cheap and please remember this article and be more sympathetic.