Mileage and travel time in home care pricing destroy margin

Aug 29
3 min read

Updated: 2 days ago

Introduction

A provider prices at an hourly rate, pays carers an hourly rate, and assumes the difference is the margin. The rota shows a carer completing six thirty-minute calls across a twelve-mile area in a morning.

Three hours are delivered and paid for. Around ninety minutes are spent travelling, plus the fuel, and depending on the jurisdiction that travel may itself be working time that must be paid. The margin calculated on the hourly rate was never real, and the provider will not discover this from the accounts because it is spread across every round. It shows up instead as a business that is always busy and never quite profitable.

1. Mileage and travel time in home care pricing are a cost of delivery

Stop treating them as overhead.

Travel is a direct consequence of each visit's location and belongs in the cost of that visit. Held in general overhead, it disappears into an average and every individual pricing decision is made on a false figure.

2. Calculate your true cost per delivered hour

The number the business runs on.

Carer pay, employer costs, paid travel time, mileage, supervision, training and office costs, divided by hours actually delivered. Providers doing this for the first time frequently find the figure is well above what they believed.

3. Check your legal obligations on travel time

Not optional and frequently misunderstood.

In many jurisdictions time spent travelling between calls counts as working time and must be paid, with consequences for minimum wage compliance across the whole shift. Confirm what applies to you before modelling anything else.

4. Price short visits differently

Where the arithmetic fails hardest.

A fifteen-minute call with fifteen minutes of travel either side costs more to deliver than it earns at any normal hourly rate. Either price these to reflect that reality or decline them, but do not accept them believing the rate covers it.

5. Build rounds by geography, not by preference

The single largest lever available.

Tight geographic rounds reduce travel dramatically, improve punctuality and make the rota sustainable for staff. Accepting every client regardless of location produces rounds that lose money on every shift.

6. Set a service area and hold it

Discipline that pays for itself.

An outlying client an extra twenty minutes away consumes time that would have delivered another visit. Defining the area, and declining or surcharging beyond it, is a decision to be profitable rather than merely busy.

7. Charge for distance where it is genuinely unavoidable

Rural work is different work.

Where a client is remote, a travel supplement is defensible and families generally accept it when explained. Absorbing it silently means the rest of your clients are paying for that journey.

8. Look at the round, not the client

The unit that determines profitability.

An individual visit can look acceptable while the round it sits in loses money because of one detour. Reviewing profitability by round exposes problems that client-level analysis conceals entirely.

9. Review the rota for travel regularly

Rounds decay as clients change.

Every ending and every new client alters the geography, and rounds that were efficient a year ago rarely still are. A periodic rebuild recovers time that has accumulated invisibly.

Ask carers where the travel is genuinely impossible. They know which sequences cannot be completed in the time allowed, and their answers identify both the loss-making legs of your rounds and the reason visits are running late.

Conclusion

Treat travel as a direct cost of each visit rather than as general overhead.

Calculate your true cost per delivered hour including paid travel and mileage, confirm your legal obligations on travel time, price short visits to reflect what they genuinely cost, build rounds by geography rather than by preference, define and hold a service area, charge a supplement where distance is unavoidable, assess profitability by round rather than by client, rebuild rounds periodically as the client list changes, and ask carers where the schedule cannot actually be achieved.