Zone pricing for taxi firms: how to set fixed fares

With zone pricing, the caller says where they are and where they're going, and the price comes straight off a list. This guide explains how taxi zone pricing works, where the law lets you set your own fares and where the council sets them for you, how to build a zone map from your own bookings, and how to price airport runs so the fare you quote is the fare the passenger pays.

What is taxi zone pricing?

Taxi zone pricing divides your area into zones and gives every journey from one zone to another a fixed fare. The passenger knows the price before the car arrives, and whoever takes the booking can quote it in seconds.

A zone can be a town centre, a group of estates, a station, a hospital or a postcode district. Prices usually sit in a grid, with pickup zones down the side and drop-off zones across the top.

Example only. Made-up zones and prices to show the layout, not a recommended price list.

A small town needs only a handful of zones. A bigger area needs more, and at that size it makes sense for booking software to look the price up instead of the person on the phone.

Zones or mileage: which should you use?

Use zones for the journeys you do every day and a mileage rate for everything else. A price list that mixes the two covers the most ground.

A workable set-up is a zone grid for local work, fixed prices for the airport and station runs you do every week, and a per-mile rate for long-distance and one-off jobs. Our guide to how to price taxi fares covers working out the rates themselves.

Who sets taxi fares in the UK?

Private hire operators set their own fares. The Department for Transport's best practice guidance for licensing authorities says plainly: "There is no power to set fares for private hire vehicles." So a private hire firm can use zones, mileage or both, and change them when it likes.

Hackney carriages are different. Under section 65 of the Local Government (Miscellaneous Provisions) Act 1976, a district council can fix hackney carriage fares for time and distance. It has to publish the proposed table in a local newspaper and give at least 14 days for objections. The guidance is clear that these are maximum fares: a driver can charge less, never more.

Two examples show how far tariffs differ:

• Bristol City Council's April 2025 table of maximum fares starts tariff 1 (Monday to Friday, 06:00 to 21:00) at £3.00, then about £2.70 a mile. Tariff 2, the weekday night rate, is about £2.90 a mile, and waiting time on tariff 1 is £20.00 an hour.
• Transport for London's taxi fares, effective from 25 April 2026, have three tariffs and a minimum fare of £4.40 at all times. TfL estimates a black cab between Heathrow and central London at £70 to £120.

In London, TfL publishes the taxi fares. Outside London, the DfT guidance says most councils use their power to set maximum taxi fares. Check your own council's current table before you set prices for hackney work. Our guide to hackney carriage vs private hire explains the two licences.

Can a hackney carriage charge a fixed zone fare?

Inside the council's area, only if the fixed fare is no higher than the meter would show. Section 67 of the 1976 Act says a hackney carriage used for a pre-booked job in its own district can't charge more than the council's fare table, calculated from where the passenger is picked up.

Journeys that end outside the district follow section 66: the fare has to be agreed before the journey, or the meter price applies. Bristol's fare table puts it in plain words: the taximeter must be engaged for journeys within the city boundary, and for journeys beyond it "a set fare or rate must be negotiated before the journey commences otherwise the taximeter must be used."

So if you run hackney carriages on pre-booked work, a zone price inside your district works as a discount on the meter, not as a price of its own. Private hire cars don't have that limit.

How do you build a zone map?

Build the zone map from your own bookings, not from a map of the town. Here's the order:

1. Pull three months of bookings. List the pickup and drop-off for each, and count how often each pair comes up.
2. Draw zones around where jobs start and end. The town centre, the big estates, the station, the hospital, the retail park and the airport each tend to be their own zone. Postcode districts are an easy starting point, but split any that mix a short hop with a long run.
3. Measure the typical journey for each pair. Take the distance and the usual time for a normal journey between the middle of each zone, and price it with your own cost per mile and per minute.
4. Check the boundaries. Two houses on either side of a zone line shouldn't pay wildly different fares for the same trip. Where they would, move the line or add a zone.
5. Write the rules for extras. Night and bank holiday rates, larger vehicles, waiting time and extra stops, each with a clear price.
6. Test it on old jobs. Price 20 past bookings with the new grid and compare with what you charged. Fix anything that's off by more than you'd accept on the phone.

Keep the first version small. A short grid you trust beats a long one you can't keep up to date.

If you take bookings in software, load the grid there so the price comes from the list, not from memory. Dispatch AI, for example, uses fixed prices by zone, set by you, and its AI phone agent quotes those prices on the call. Our guide to moving from paper to a booking system covers loading prices in a changeover.

How do you set fixed airport fares?

Set one price per zone to each airport, and make it include every charge the passenger has to pay. Airport runs are where fixed prices win jobs, because the passenger is comparing quotes, and where hidden extras cause the most complaints.

Heathrow is a good example of a charge to build in. Heathrow's Terminal Drop-Off Charge is £7 each time a vehicle enters a terminal drop-off zone, and Heathrow says all taxis and private hire vehicles must pay it. It has to be paid by midnight the next day, or Heathrow issues an £80 parking charge, reduced to £40 if paid within 14 days. For black cabs, TfL allows an extra charge of up to £6.00 for dropping off in Heathrow's terminal zones.

Since the Digital Markets, Competition and Consumers Act 2024, the law on headline prices is stricter. The Competition and Markets Authority's guidance says showing an initial price and then "introducing additional mandatory charges as consumers proceed with a purchase", known as drip pricing, is prohibited. So if a drop-off or parking charge is unavoidable, it belongs in the airport fare you quote, not on top of it.

Decide your rules for flight delays and waiting before you publish airport prices, and put them on the confirmation. Our guide to airport transfer booking software covers taking airport bookings.

How often should you review your zone prices?

Review the grid when your costs move, not just once a year. The DfT tells councils that taxi tariffs should be reviewed after significant changes in licensing fees and other major costs such as fuel, and the same logic applies to your own price list.

Look at three things each time: the jobs you lose on price, the jobs you win and lose money on, and the zone boundaries passengers complain about. Change a few prices at a time, so you can see what each change does.