Business Price Lists for Courier Services: How to Develop a Price List Your Bank Account Can Live With
Developing a price list for your courier business is more than critical, it needs to be ready before your business cards. So when you first enter the market as a new business, what is the plan? How much can I charge and still get the business? Is it enough to make a profit and can I grow the business on that profit margin or just survive? Let’s take a look at some ideas.
Know your Market. You should first take a look at the competition. What are your base prices for local deliveries and how much do you charge per mile for a delivery? Do you have different prices for small vehicles and vans? (Trucks have a completely different pricing structure) Do you charge for attempts? Do you charge for waiting time? Do you charge by weight and number of packages? What about additional stops in the same race? Do they include fuel surcharges, after-hours surcharges, etc. to your bills and add a late fee to your overdue bills? Do some good detective work and get a copy of their price sheets if possible.
Base Price – This is the price you charge for a delivery typically within a 25-mile radius of your base location. You can go 1 mile or the full 25 miles, but the charge is the same. Many companies simply use the base charge as their base city and use a flat rate for the entire city (depending on size, of course). However, this is a significant price because many times more than 50% of your business is done here. If you undervalue or overvalue this, “you lose”.
Mileage Charge: This one has some bumps. Your mileage charge must be competitive and reflect the market in which you are working. Some areas get more per mile and some less. It depends where you live. As of this writing, I see mileage charges of $1.35-$2.25 per mile in various areas. What you have to decide is what price your customer can live with, while still allowing them to earn a living, maintain maintenance and pay for gas. If you choose the wrong number “you lose”.
Overloads: There are many different types of overloads. The most common ones are fuel surcharges, after hours surcharges, extra man, equipment, airport, vacation and more.
Fuel overload is one of the most important in today’s environment. It’s there to allow your mileage rate to remain stable while adjusting for rising fuel costs. Right now, the average fuel surcharge is 15% to 22%, depending on your market. That is the percentage that you add to the base total of each delivery.
Next up is After Hours overload. It is common for a business to increase your charges by an additional percentage or flat rate after regular business hours, such as after 6:00 pm and 6:00 am
What about holiday surcharges? The best way to determine which holidays is to use the hours of the world’s largest shipping company FedX. If they aren’t running, then charge a holiday surcharge. Get a schedule from FedX and list those holiday dates on your list/price sheet. The amount is usually a flat fee, often $25 or more.
Airport Surcharges – As a time-critical courier, you will often go to the airport for pickup or delivery. The airport can be a bottomless pothole where drivers get lost. The plane is delayed, the lines are long, the agent isn’t there, the forms need to be filled out correctly, all of which take extra time and effort. Therefore, you add an additional fixed fee to your base price, each time you go to the airport. Often it will be $5 to $25 depending on your situation.
Late Fees – Many businesses feel that if they charge a late fee, they will lose their customer. I can’t deny that this can happen, but it’s better to leave you owing $100 than $5,000. It’s happened to me with some of the best, so do what all your other providers do, charge them if they’re late, whether it’s 30, 45, or 60 days, you’ve decided what your terms will be.
Attempts: Sometimes you will arrive to pick up a package and it will not be ready or you will go to deliver a package and you will not be able to sign for it and receive it. That’s an attempt. It takes him as long to do that as it does to finish the job, so he charges a fee for his time and effort. Most companies charge 50% to 100% of the original price for one try. Don’t do your customers a favor here unless you feel you have to. Your time must equal $$$$ as well.
Additional Personnel/Equipment Surcharges: For some deliveries, you may require special equipment such as furniture blankets, special hand trucks, straps, or lifts. All of this comes at a price to you and you need to pass it on to your customer. The amounts to be charged here vary too much for me to add any advice, but cover your cost and add a profit percentage. Also, on some occasions, you may need to send an extra man to help with a load. When you do, develop a reasonable hourly rate and start the clock from the time you get in the vehicle until you finish the job and return.
Weight and number of packages: When you charge flat rates, you should assume there is a weight limit on that rate before adding the charge. Also, the same applies to the number of packages. So in your list/price sheet tell the customer what that limit is. For example, this price is good for the first 200 lbs. More than $00. ?? per additional pound. Or the same with the number of packages. this price is good for the first 3 packs, after that $??.?? per additional pack.
Extra Stops – When you pick up multiple packages at the same location to deliver to the same customer, they usually expect a price break. Now this applies only if you are within the same city or within a 25 mile radius, for example. It is common to charge 50% for additional deliveries. If those deliveries are to other areas, then it is full rate.
Waiting time: Deliveries don’t always run like clockwork. There are times when a package isn’t ready when it arrives, there are times when you have to wait for someone to sign or you can’t find the person to sign for. That’s where the wait time comes into play. It generally allows the customer 15 minutes per location to affect pickup or delivery. After that, you charge per minute of waiting time. That rate is usually $30-$40 per hour divided into minutes.
Van Price – All I will say at this point is that all of the above, while referring to small vehicles like cars and small trucks, also applies to vans. Except that the base charge, mileage charges and various other surcharges must be adjusted due to the higher cost of operation.
Keep your Price List updated at all times. Make it look clean and professional. Have it ready to hand out OFTEN! Make sure it’s easy to read and gives customers what they need to choose you as their Courier.
All these surcharges must be stated in your list/price sheet and the customer must be fully aware of the charges. NO SURPRISES or “You Lose”.
Make your courier service business the one that will dominate your market.