Your Biggest Customer Might Not Be Your Best Customer

Motorcoach operators know what a customer spends. But after discounts, deadhead, driver time, fuel, itinerary changes, slow payments and the coach days that account consumes, do we know what the customer actually makes us?

By Dhinel “Danny” Biyanwela

I came across a LinkedIn post recently that got me thinking about something we probably don't talk about enough in the motorcoach business.

The basic idea was simple.

A customer promises a lot of volume. You give them a better rate because of that volume. The volume never really materializes.

But somehow the discount does.

I read that and immediately started thinking about charter buses.

Because how many times have we heard some version of this?

“Take care of us on the rate. We're going to give you a lot of business.”

Maybe it's a university. Maybe a hotel. Maybe a tour company, DMC, broker, school, sports organization or corporate account.

And sometimes they absolutely do give you the business.

But I think there's a second question we should be asking.

Did we actually make money on it?

A $500,000 CUSTOMER SOUNDS PRETTY GOOD

Let's build a fictional account.

I'm deliberately making these numbers illustrative. They're not industry averages. The point is to show how I'd want to analyze an account using the operator's actual numbers.

Let's say a customer produces:

$500,000 in annual revenue.

That's a big account for a smaller motorcoach company.

Sales loves them.

Management knows their name.

They're probably on the list of top customers at the end of the year.

Now let's say that $500,000 requires 300 coach days and approximately 90,000 total miles, including deadhead.

Already we have two numbers that I think deserve more attention:

Revenue per coach day: $1,667

Revenue per total mile: $5.56

Neither number tells us whether the customer is profitable.

But now we can start asking better questions.

START WITH FUEL

As I'm writing this, EIA's national average for on-highway diesel is $6.529 per gallon. A year ago it was $3.749.

For illustration, suppose our coach averages 6 mpg.

At $6.529 diesel:

Fuel cost per mile = about $1.09

Across 90,000 miles:

Fuel = approximately $97,935

Now look at what happened simply because fuel changed.

At last year's $3.749 national diesel price, those same 90,000 miles at 6 mpg would have consumed about $56,235 in fuel.

Same customer.

Same rate.

Same buses.

Same miles.

About $41,700 more in annual fuel expense at today's national price.

That's the problem with looking at an old contract and saying:

“We've always made money on this customer.”

Maybe you did.

That doesn't necessarily mean you're making the same money today.

THEN THERE'S THE DRIVER

Driver expense isn't just the hours the coach is moving.

There's pre-trip. Positioning. Loading. Waiting. The actual movement. Post-trip. Sometimes hotel. Sometimes per diem. Sometimes overtime. Sometimes a relief driver because the itinerary changed enough to create an hours-of-service issue.

The BLS says the median annual wage for transit and intercity bus drivers working specifically in the charter-bus industry was $48,420 in 2025.

That doesn't tell us what any particular operator's fully burdened driver cost is. Payroll taxes, benefits, workers' compensation, overtime, hotels and per diem can all change it.

So for our fictional example, let's assume the fully loaded driver expense averages $350 per coach day.

Across 300 coach days:

Driver expense = $105,000

Now our $500,000 account has already consumed:

Illustrative account	Amount
Revenue	$500,000
Fuel	($97,935)
Driver expense	($105,000)
Remaining before other costs	$297,065

Still looks pretty good.

But we're nowhere near finished.

THE MILES DON'T STOP COSTING MONEY AFTER THE FUEL PUMP

Every mile is doing something to the coach.

Tires.

Brakes.

Oil.

Filters.

Suspension.

HVAC.

DEF and emissions equipment on newer equipment.

Preventive maintenance.

Repairs.

Eventually engines and transmissions.

And ultimately the coach itself.

The ABA Foundation says the average motorcoach traveled 40,297 miles in 2025. Our hypothetical account is consuming 90,000 total coach miles across the fleet.

For illustration, let's establish a 75-cent-per-mile maintenance and wear reserve.

Again, that is our hypothetical assumption, not an industry benchmark. An operator should replace it with their own maintenance cost per mile.

At 90,000 miles:

$67,500

Then let's say this account creates another:

$35,000 in tolls, parking, driver hotels and per diem.

$15,000 in commissions, payment expense and additional account servicing.

And here's one operators sometimes don't catch:

$25,000 of revenue leakage.

Extra hours that weren't billed.

Additional mileage.

Wait time.

Itinerary changes.

An extra airport movement here.

Parking absorbed there.

Nothing catastrophic.

Just little pieces of revenue that never made it onto the invoice.

Christian Riddell recently described this problem well in TBN Drives: the trip that was quoted and the trip that actually operated aren't always the same trip. If nobody reconciles the two, the original quote can be perfectly reasonable while the completed trip becomes less profitable.

Now let's run our account again.

THE NUMBERS

Illustrative $500K customer	Annual Amount
Revenue	$500,000
Fuel	($97,935)
Driver expense	($105,000)
Maintenance/wear reserve	($67,500)
Tolls, parking, hotels & per diem	($35,000)
Account/payment expense	($15,000)
Uncaptured revenue leakage	($25,000)
Contribution remaining	$154,565
Contribution margin	30.9%
Contribution per coach day	$515

Now we're looking at the customer differently.

And remember: that $154,565 isn't necessarily company profit.

We haven't allocated the full burden of insurance, equipment financing, facility expense, management salaries, property, technology and other overhead.

That's why I'm calling it contribution, not net profit.

The purpose isn't to decide whether 30.9% is good or bad.

It's to finally know the number.

DEADHEAD CAN MAKE TWO IDENTICAL CUSTOMERS COMPLETELY DIFFERENT

This may be one of the biggest things a revenue report hides.

Suppose Customer A and Customer B each spend $200,000.

Customer A's work generally starts near the yard.

Customer B's work requires significant positioning.

Accounting says:

Customer A — $200,000 revenue

Customer B — $200,000 revenue

Looks equal.

It isn't.

Every unpaid positioning mile consumes fuel, driver time, maintenance and coach life.

At our illustrative 6 mpg and the September 21 national diesel price, 100 deadhead miles alone consume about $109 in diesel.

Do that 100 times:

$10,900 in fuel.

And that's before driver expense, maintenance and wear.

This is why I don't think customer profitability can be measured only by what appears on the invoice.

THEN THERE'S THE BUS YOU COULDN'T SELL TO SOMEBODY ELSE

This is the part I find most interesting.

A coach on a Tuesday in February isn't economically identical to the same coach on the last available Saturday in May.

Motorcoach operators have understood this for years. Operators interviewed by Metro Magazine discussed demand/yield pricing as far back as 2015—charging differently during busy ski, wedding and weekend periods and discounting during slower periods to utilize otherwise idle equipment.

More recently, TBN made essentially the same argument around scarcity: price shouldn't reflect only miles, hours and costs; equipment availability, driver availability, timing and market demand matter too.

Now apply that to a contract customer.

Let's say our big account pays:

$1,650 per coach day.

On a Wednesday in January, I've got buses sitting.

I'll take the work.

But what if the contract requires ten coaches on a Saturday in May when I could potentially sell those coaches at substantially higher retail charter rates?

The accounting system still says:

Revenue: $16,500

What it may not show is the higher-margin work we couldn't accept because those ten buses were already committed.

That's opportunity cost.

And I think it belongs in the conversation.

Not because every peak-day contract is bad.

Maybe that account gives us tremendous winter volume.

Maybe it keeps drivers working.

Maybe it produces predictable cash flow.

Maybe the annual relationship more than compensates for those peak dates.

But now we're analyzing the whole customer relationship, not celebrating a Saturday because ten buses moved.

THE BIG CUSTOMER VERSUS THE GOOD CUSTOMER

Here's another fictional example.

Suppose these are two accounts in the same company:

	Customer A	Customer B
Annual revenue	$180,000	$500,000
Contribution after variable/customer costs	$54,000	$75,000
Contribution margin	30%	15%
Coach days consumed	90	300
Contribution per coach day	$600	$250
Typical payment	15–30 days	60–75 days
Peak-season demand	Low	High

Which is the better customer?

I'm not going to answer that for somebody else's company.

But I know which numbers I want to see before making the decision.

Customer B produces almost three times the revenue.

It also consumes more than three times the coach days.

Customer A generates $600 of contribution for every coach day consumed.

Customer B generates $250.

Now the conversation has changed.

That's the problem with ranking customers by revenue.

Revenue measures how much they buy from us.

It doesn't necessarily measure how valuable the relationship is to us.

AND WHAT ABOUT THE $500,000 CUSTOMER WHO NEVER BECAME A $500,000 CUSTOMER?

This brings me back to the post that started me thinking about all of this.

A customer says:

“Give us your volume rate. We're going to do $500,000 with you.”

So we price aggressively.

End of the year:

Actual revenue: $185,000.

But they're still paying the $500,000-customer rate.

Why?

A volume discount that doesn't depend on volume eventually stops being a volume discount.

It's just a discount.

That doesn't mean every operator should immediately rewrite their contracts.

It means promised-volume pricing deserves to be reviewed against actual volume.

Maybe that means annual reviews.

Maybe quarterly.

Maybe tiered pricing.

Maybe a rebate once volume is actually achieved instead of giving the entire discount upfront.

Different customers and contracts will require different structures.

But I think the underlying question is pretty simple:

Did the customer earn the economics we priced into the relationship?

SLOW MONEY COSTS MONEY TOO

Then there's accounts receivable.

A customer can be profitable on paper and still put pressure on the company.

Drivers don't wait 75 days for payroll because your customer hasn't paid.

Neither does the fuel station.

Neither does the insurance company.

Neither does the bank.

If Customer A pays in 15 days and Customer B routinely pays in 75, those customers are using your working capital very differently.

That doesn't automatically make Customer B bad business.

But it belongs in the calculation.

Especially in an industry where 87.3% of companies operate fewer than 25 coaches.

For a smaller operator, financing a large customer's receivables can become a very real cash-flow issue.

SOME CUSTOMERS ALSO CONSUME THE OFFICE

This one is harder to measure.

One customer sends an itinerary.

We quote it.

They approve it.

We run it.

We invoice it.

They pay it.

Another customer asks for four versions of the quote, changes the itinerary six times, adds stops the night before, calls dispatch during the trip, disputes the overtime afterward and then takes two months to pay.

Same $2,500 invoice.

Not the same customer.

Sales time has a cost.

Dispatch time has a cost.

Accounting time has a cost.

Management time has a cost.

And when those little demands are multiplied across 100 trips, they become real.

I'd call this cost to serve.

It probably doesn't need to be calculated down to every five-minute phone call.

But if an account consistently requires substantially more resources than other customers producing similar revenue, I want to know that.

MAYBE WE'VE BEEN ASKING THE WRONG QUESTION

I don't think the answer is to start firing every difficult customer.

That's not where I'm going with this.

A low-margin account can still be valuable.

It may fill buses during slow periods.

It may provide consistent weekday work.

It may keep drivers employed year-round.

It may give the company predictable cash flow.

It may position equipment for another movement.

It may introduce us to other customers.

There can be strategic value that doesn't appear neatly on one trip's P&L.

But we should know what we're trading.

Because the motorcoach business is a capacity business.

We have a finite number of buses.

A finite number of drivers.

A finite number of hours.

And every time we commit one of those resources to Customer A, it isn't available for Customer B.

That's why I'm starting to think the most important customer report in a motorcoach company may not be:

TOP CUSTOMERS BY REVENUE

It may be:

CUSTOMER PROFITABILITY

Revenue.

Contribution margin.

Deadhead.

Coach days.

Contribution per coach day.

Average days to pay.

Revenue leakage.

Peak-season capacity consumed.

And maybe one final column:

Is this relationship still working for both sides?

Because a $500,000 customer sounds impressive.

But revenue doesn't pay the bills.

Margin does.

And sometimes the customer we brag about the most isn't necessarily the customer making us the most money.

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A SIMPLE CUSTOMER PROFITABILITY CHECK

For operators who want to look at this inside their own company, I wouldn't start with complicated software.

Take your ten largest customers and pull the last twelve months.

For each one, calculate:

Revenue
minus driver cost
minus fuel
minus tolls/parking/hotels/per diem
minus maintenance and vehicle-use reserve
minus commissions/payment costs
minus unbilled changes or identifiable revenue leakage

That gives you a starting contribution number.

Then divide it two ways:

Contribution ÷ Revenue = Contribution Margin %

and

Contribution ÷ Coach Days = Contribution per Coach Day

Then add:

Total deadhead miles

Average days to pay

Peak-season coach days consumed

Those few numbers may tell you more about the quality of an account than the annual revenue number ever did.

Not to tell anyone what to do with their business.

Just to give us a better financial picture of the business we're already in.

Sources & Further Reading

The American Bus Association Foundation's 2026 Bus Census provides current industry size, charter participation, fleet-size and mileage data. The U.S. Energy Information Administration's diesel price series provides current weekly U.S. and regional diesel prices. The Bureau of Labor Statistics bus-driver data provides current national driver wage information.

For the pricing side, Metro Magazine's motorcoach demand/yield pricing discussion is older but still useful background. TBN Drives has two particularly relevant current pieces: The Scarcity Premium: Dynamic Pricing in the Motorcoach Industry and The Trip You Quoted Isn't the Trip You Ran.

About the Author

Dhinel “Danny” Biyanwela works in motorcoach and ground transportation with experience in operations, vehicle sales, finance and fleet management. Through The Motorcoach Insider, he writes about the business behind transportation and the economic changes affecting independent operators.