Courier Service Business Price Lists – 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 should be ready before your business cards. So, when you are 1st getting into the market as a new business, what’s 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 first need to take a look at the competition. What are their base prices for local deliveries and what do they charge per mile for a delivery? Do they have different pricing for Small Vehicles and Vans? (Trucks are a different pricing structure entirely) Do they charge for Attempts? Do they charge for Wait Time? Do they charge for weight and number of packages? What about additional stops on the same run? Are they including fuel surcharges, after hours surcharges, etc. to their bills and do they add a late fee to their past due invoices? Do some good detective work and get a copy of their price sheets if at all possible.
Base price: This is the price you charge for a delivery usually within a 25 mile radius of your base location. You may go 1 mile or the full 25 miles but the charge is the same. Many companies simply use the base charge as their home base City and use a flat rate for the entire City (depending on the size, of course.) This is an important price, however, because often times more than 50% of your business will be done here. If you under price or over-price this “You Lose”.
Charge per Mile: This one has some bumps in it. Your per mile charge must be competitive and reflect the market you are working in. Some areas get more per mile and some less. It depends on where you live. At the date of this writing, I see per mile charges of from $1.35-$2.25 per mile in various areas. What you have to decide is what price your customer can live with, while allowing you to make a living, keep up the maintenance and pay for the gas. If you pick the wrong number “You Lose”.
Surcharges: There are many different types of surcharges. The most common are Fuel surcharges, After Hours surcharges, Additional Man, Equipment, Airport, Holiday, and more.
The Fuel surcharge is one of the more important ones in today’s environment. It is there in order to allow your per mile rate to remain stable while being able to adjust for the rising cost of fuel. At this time the average fuel surcharge is 15%-22%, depending on your market. That is the percentage you add to the base total of each delivery.
Next is the After Hours surcharge. It is common for a company to increase their charges by a percentage or a flat additional fee after regular business hours as in after 6PM through 6AM.
How about Holiday surcharges? The best way to determine what holidays is to use the schedule of the largest Courier Company in the World FedX. If they are not running, then you charge a Holiday surcharge. Get a schedule from FedX and list those Holiday dates on your price list/sheet. The amount is generally a flat rate often $25 or more.
Airport surcharges: As a time-critical courier, often times you will be going to the airport to pickup or deliver. The airport can be a bottomless pot hole that drivers get lost in. The plane is delayed, the lines are long, the agent isn’t there, the forms need to filled out properly, all of which takes extra time and effort. Therefore, you add a flat additional fee to your base price, every time you go the the airport. Often that will be $5-$25 depending on your situation.
Past Due Fees: Many companies feel that if they charge a late fee for payments, they will lose their customer. I can’t deny that this may happen, but better they leave you owing $100 than $5,000. It has happened to me with some of the best, so do what all their other vendors do, charge them if they are late, whether that is 30, 45 or 60 days, you have decide what your terms will be.
Attempts: On occasion, you will arrive to pickup a package and it won’t be ready or you will go to deliver a package and no you will be able to sign for it and receive it. That is an attempt. It takes you as long to do that as it does to actually finish the job, so you charge a fee for your time and effort. Most companies charge from 50% to 100% of the original price for an attempt. Do not do your customers any favors here unless you feel you must. Your time must equate to $$$$ too.
Additional Man/Equipment surcharges: For some deliveries, you may need some special equipment, such as furniture blankets, special hand trucks, straps or lifts. These all come at a price to you and you must pass that on to your customer. The amounts to charge here vary far to much for me to add any advise but cover your cost and add a percentage of profit to it. 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 he gets in the vehicle until the job is done and he returns.
Weight and Number of Packages: When you charge flat rates, you must assume that there is a weight limit on that rate before you add to the charge. Also, the same applies to the number of packages. So in your price list/sheet, tell the customer what that limit is. For example, this price good for the 1st 200 lbs. Over that $00.?? per pound additional. Or the same with the number of packages. this price good for the 1st 3 packages, after that $??.?? per package additional.
Additional Stops: When you pickup several packages at the same location to deliver for the same customer, they usually expect a break in the price. Now this applies only if it is within the same city or 25 mile radius area, for example. It’s common to charge 50% for the additional deliveries. If those deliveries are in other areas, then it is at full rate.
Wait Time: Deliveries don’t always go like clockwork. Their are times that a package isn’t ready when you arrive, their are times you must wait for someone to sign or can’t find the person to sign. That’s when Wait Time kicks in. Usually, you allow the customer 15 minutes per location to affect the pickup or delivery. After that you charge per minute Wait Time. That fee is usually from $30-$40 per hour broken down into minutes.
Van Pricing: All I will say at this point is that all of the above, although meant to address small vehicles such as cars and small trucks, also applies to Vans. Except, the base charge, mileage charges and several other surcharges need to be adjusted due to the increased cost of operation.
Keep your Price List updated at all times. Make it look neat and professional. Have it ready to hand out OFTEN! Make sure it is easy to read and gives the customers what he needs to pick you as his Courier Service.
All of these surcharges must be listed on your price list/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.