Valet Parking by the Half-Hour

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In a hurry while taking my mom to the Heart Hospital, I decided to use valet parking. I assumed that, as is standard at restaurants, there would be a fixed charge. To my delighted surprise (given that this was to be a very short visit), the valet parking marginal price was by the half hour: $1 for the first, $.50 for the second, $1 for the third, $.50 for the fourth, etc., up to $5 maximum for any stay over 3 hours.

There was essentially no fixed price component-it was a nonlinear one-part tariff. This struck me as unusual, since the costs of valet parking the car are almost entirely fixed-putting the car away once and taking it out. I wonder why the hospital uses this pricing model? Are they trying to be nice to the many elderly, low-income patients? Are the costs somehow passed on in everyone’s medical bill?


frankenduf

simple liability containment- it's so you don't get a heart attack when you see the bill

Aaron K

Parking costs are fixed? Unless you take into account the rental price of the parking space, which is what you were after to begin with...

mapgirl

Certain transport costs are reimbursable by HCSA's. (The old Medical FSA.)

In wintry places where icy sidewalks are an issue, nominal valet parking fees are common. Why risk a hip injury when you went in for a routine check up?

Brian S

I would assume that, if they are frequently at or near to capacity, a pricing structure that incentivizes short stays would allow them to increase throughput. Then again, with that pricing model and no fixed component, it's in their best interest for a customer to stay as close to 3 hours as possible, minimizing labor costs per parked hour.

Of course, the valets, who rely on tips, probably see things differently.

Mike B

Actually the costs might not be fixed. As cars wait in the parking lot to be claimed they might be parked in and getting them out may involve more effort the longer the car has been in the lot. For short stays the car would still be fresh and easily retrieved.

I guess we can infer that the hospital is using a First in Last Out Stack as a parking structure.

TonyB

I would disagree that the cost is fixed.

The person taking putting the car away and taking it out is not getting paid by the car but by the hour. So if they part 1 car or 10 cars in an hour the rate is the same.

However if your car is parked for 3 hours that is 3 hours that another car couldn't be in that spot. That probably only comes into play if the lot is at or near capacity though.

Gabe

Did they ask you up front how long you intended to stay?

If so, maybe they have different sections where they park the cars, depending on how long you plan to stay. For instance, if you're staying for a long time, they will park it farther away. This means a longer walk back to the stand, so more time it takes, and thus more $$$ to charge you for it.

Rick

Maybe the true fixed costs of parking a car are actually quite cheap (equal to or less than the cost of the first 30 minutes.) Thus, they cover their costs regardless of the time and the rest is essentially a value pricing model meant to maximize return.

Perhaps they've seen that the consumer places varying value on the valet service based on their time and thus they've priced to better meet this demand curve.

levi

maybe a limited amount of parking spots, so they are trying to encourage short visits?

JoelGuelph

Maybe it is tip related.

The more cars one parks, the more tips one can get. Lower prices for less time encourages people to park there for short periods of time, therefore there are more opportunities to earn tips.

Chuck Linn

In my experience, valet parking in hospitals uses (and competes for) hospital parking ramp space. I can't answer for the non-linear strangeness, but can theorize that it is simply a fixed fee on top of the parking ramp schedule.

One thing for sure - it's a great deal compared with almost any restaurant!

Chad Bergeron

At a guess, this relates to the quantity of parking. If they can encourage you to get out faster, they can reclaim the space your car occupied for another car. As the valet, I'd prefer the progressive pricing - not only can I get $6 (or more if people are there very briefly) worth of 30 minute parking fees in a three hour window, but it -encourages- valet parking, and the greater number of tips that come with it. The alternative to a parking shortage - a higher flat fee, would discourage short term parking and reduce the number of tips. In a worst case scenario, the reduced income for the attendants may make the valet division close up.

Also in the case of visitors, it may reduce the amount of loitering people do in the hospital, which may reduce some of the other costs the hospital hasn't externalized (water use, waste management, staff time).

Mike

How is this different from valet garages in Manhattan that charge a smaller amount for shorter stays (although at much higher prices)? Those price plans have been around here for decades.

htb

The local hospital offers free valet service; it also offers (100%) free parking.

I suspect that the "valet" fee is really a plain old "parking" fee.

EIleen Wyatt

If the first 30 minutes is $1 and the next 30 minutes is only an additional 50 cents, there's a DISINCENTIVE to park for the shortest stay of 30 minutes or less. The rate per minute is cheaper for a full hour.

What puzzles me is this pattern applies to subsequent hours. What does the parking facility gain by having cars stick around in 1-hour increments rather than 30-minute increments?

Roger McGoodington

yeah, the costs of my apartment is fixed. so why does the landlord keep charging me rent every month?

Chris

So, considering where you were parking and the relatively low parking rates, I suspect that this has nothing to do with trying to create incentives for you to return faster -- your Mom's appointment is going to take the same amount of time regardless of whether the valet parking rate is fixed or variable. The only important thing is that it not be so expensive that you're likely to find other parking.

They've probably taken a survey, found that people would gladly pay $1.00 for 30 minutes of valet parking (saves time trudging back and forth to the lot) or $1.50 per hour, but disliked the policy of having to pay for an entire extra hour if you've been there for 62 minutes. Within those boundaries, they found a policy that gives them more profit than a straight 75 cents/hour.

Craig in MN

Practically no one plans their time at a hospital based on how much parking cost. If I'm going, I'm going to an appointment that lasts X minutes (plus some time getting there and back). Either that or visiting a patient for whatever time I feel like visiting. I'd say the hospital caps the all day rates to appease doctors or whoever uses that, knows what the sweet spot is for people with normal duration appointments is (just over an hour for $2.50), and can't do a whole lot about the other rates, since they need to fall within the ranges of those limits without antagonizing the customers that just miss a cutoff.

I was in an hourly parking ramp a few weeks ago, and was in line behind 7 cars to pay....I just missed my time cutoff and got bumped into the next half hour charge....it cost me 2 bucks because they only had one pay booth open instead of two. Parking facilities know what they are doing.

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Doc

It isn't nonlinear, it's linear. $1.50 per hour. The McGuffin is that the one thing people hate (especially cranky old people who visit in greater numbers than other people) is getting charged for a whole hour if they're only a few minutes into it. This way they get charged for a marginal half hour but the hospital gets 2/3 of an hour charge so everybody wins. Parkers pay less at the margin and the parking deck gets to resell the second half hour for $1.00. Hospital parking operator gets on average more than $1.50 per hour. Given the level of ins and outs I see at our local hospital deck I'd guess that this came out of a yield management algorithm from the hotel or airline business.

Smart.

Dale M

Most interesting to me in all this is the non-monotonic marginl cost (oscillating, even). Under what circumstances might that be possible?

What if the valet were a private contractor renting spots from the hospital? Suppose the valet pays a per-spot rental rate for any hour or portion thereof, but wishes to charge a half-hour rate to its clients in order to capture the short-stay market. Charging $1 and then $0.50 for alternate half-hours would deliver a linear gross margin on each space used, with demand determining quantity and profit. There's no variable cost on parking and retrieving the car, since the attendant is being paid either way.