Marginfuel raises cash for rental car bid

A Wellington company has raised $810,000 to boost its bid to bring airline-style pricing systems to the rental car market.

As a means of maximising revenue, airlines have developed sophisticated systems to manage what prices to charge on what routes at any given moment.

However, the complexity of the rental vehicle market means many do not yet have the technology.

Andrew Pascoe, who previously worked for Air New Zealand and has also worked on dynamic pricing models for companies including Kiwirail, now heads Marginfuel, a small operation that offers a cloud-based product mainly targeting rental vehicles.

‘‘Rental car operators have a huge amount of price points live in the market at any one time’’ including vehicle type, location, length of hire, across a large number of websites, Pascoe said.

‘‘A large company could have literally millions of prices live, and the management of the price points is difficult, and optimisation of those is an almost impossible proposition without software that comes in and determines at scale what the right prices to be charging at any point in time.’’

Though the major players already had legacy systems to assist price management, these tended to be unwieldly.

Marginfuel’s software will do more than simply tell rental car companies to raise prices when demand is high – it will also point to the need to reduce prices.

‘‘The revenue maximisation and margin maximisation can see companies charge less. It’s all in light of the … demand and capacity patterns,’’ Pascoe said.

The company has already signed up leading brands in New Zealand and Australia as well as customers in the United States.

According to Pascoe, customers using the software typically see a revenue boost of about 8 per cent.

Marginfuel aims to increase its recurring revenues to $2 million a year within 18 months and to break into profit in early 2019.

In December the company raised $810,000, mostly from its existing investors within the Wellington Angel HQ network, as well as the New Zealand Venture Investment Fund.

It has also received grants from Callaghan Innovation for development projects worth $450,000.