How much should Be Delivery Charge

[momon121]

Hi

I have confectionery business and I offer delivery services to 3 neighbouring towns.

For the last 4 years we have been charging minimum £1 for delivery. The destination could range from 3 -10 miles.

I personally do the deliveries myself after work. On average I’m finishing at 20:00 in the evening.

Last year I clocked up over 25000 mileage primarily due to local delivering.

With that came wear and tear, occasionally costing me over £100s in repair.

Initially I agreed to the £1 delivery because to encourage people to shop with us online via FB however now it’s becoming less cost effective to offer this service.

I’m in discussion with a self employed driver offering them £3 for every drop!

We Would appreciate some advice and thoughts on this matter. On average we do 10 deliveries a day.

 

[Mr D]

Work out the fuel, insurance, wear and tear etc on the level of mileage for delivering. Break it down per delivery order. Then you'll know how much it costs you per delivery.
Whether you charge that full rate or just a contribution towards it is up to you.

 

[momon121]

Sorry to ask but how to break the cost down for each delivery?

 

[Mr D]

Sorry to ask but how to break the cost down for each delivery?

Add the costs relevant to the deliveries together. For instance you know you do a chunk of 25,000 miles. You know what your extra insurance and extra servicing costs are. Can guess a figure for depreciation.

You know how many deliveries you do in a year.

Divide one by the other and you get an average cost per delivery. May well be higher than £1.

 

[momon121]

Okay I’ve worked it out by the following method

£800 insurance
£500 servicing cost
1800 deliveries a year


£800+£500= 1300

1800/1300 = £1.34 would that be correct ?

 

[Newchodge]

Keep an exact record of the miles that you do. Record the cost of your fuel over the same period. Work out the fuel cost per mile. Calculate just the fuel cost of a 1 mile, 2 mile 10 mile delivery. then look at all the other costs involved. Your time, wear and tear on the vehicle etc. Then decide if deliveries are worthwhile.

 

[Newchodge]

Okay I’ve worked it out by the following method

£800 insurance
£500 servicing cost
1800 deliveries a year


£800+£500= 1300

1800/1300 = £1.34 would that be correct ?

No, completely wrong. Does your vehicle run on air?

 

[Mr D]

Okay I’ve worked it out by the following method

£800 insurance
£500 servicing cost
1800 deliveries a year


£800+£500= 1300

1800/1300 = £1.34 would that be correct ?

Add a few thousand for fuel?

Whatever that works out as.

Just off the top of my head I'd be adding £2500 in fuel, so costing with that figure £2.11 a delivery.

Factor in depreciation of vehicle, factor in your time for delivery at say £10 per hour.

Put it this way, from what I gather the supermarkets who charge delivery charge of £3 to £5 per delivery lose money on deliveries. You charging £1 per delivery I can understand your buyers would be overjoyed.

 

[momon121]

You guys are so awesome, I’m been a numty all this time

 

[momon121]

I guess my intentions weren’t as sustainable as I predicted. I thought that I could manage on £1 but completely failed to factor in my time and wear and tear. I was so busy focusing on making my customers happy and making me forget the realities in life

 

[Newchodge]

I guess my intentions weren’t as sustainable as I predicted. I thought that I could manage on £1 but completely failed to factor in my time and wear and tear. I was so busy focusing on making my customers happy and making me forget the realities in life

That can be a valid way of running your business, but you must factor in everything. If you have 250 satisfied customers, who keep coming back and who place orders each time that give you £20 profit, it doesn't matter if you lose £2.00 on the transport - you have still made £18 overall profit.

 

[Mark T Jones]

The way I see it is that HMRC allow you .45p per mile to run your vehicle (needs checking, I'm not up to date). They aren't doing that to be generous. so it's at least a useful benchmark

 

[Chris Ashdown]

Have you checked out royal mail for small packets may be cheaper and give you more time off

 

[Socio South West]

Throwing Mark T Jones fag packet mileage figure and a couple more in suggests:

25000 miles to do 1800 deliveries.....

@ £0.35 / mile = £4.86 / delivery
@ £0.45 / mile = £6.25 / delivery
@ £0.60 / mile = £8.33 / delivery

As others have said, complete recoup of the delivery cost may not be desirable, but in that case ensure margins and minimum order levels protect you.

 

[Gecko001]

Delivering personally could be a real boost to your sales. The personal touch helps and changing to delivery system by post or courier would take away this personal touch.

It is often difficult to increase your prices without losing customers. Do other suppliers to the shops you supply, charge for delivery?

 

[momon121]

I don’t supply shops Gecko it’s the end consumers. I would agree that delivering items personally gives it that personal touch and builds confidence to our service.

That was another issue, as I do all the deliveries on average I’m finishing at 8 in the evening. Hopefully moving forward I’ll hire a driver and use a similar strategy like yodel whereby they pay £0.60p per parcel I’ll offer my drivers £2 a parcel using their own vehicles.

We have checked with Royal Mail sadly the prices are higher because our boxes are same size an average crisp box.

 

[momon121]

Great post!

Really Angel? Why please? If this is genuine comment then I must confess that much of my success has stemmed from individuals from this forum

 

[Chris Ashdown]

Teenage Girl may do it for the £20 a night, Girls more sensible at that age and teens always want petrol so £20 may come handy

Not sure how you would handle them as could be self employed but under tax limits, also insurance issues using car for business purposes

 

[momon121]

If I get them on a self employment basis do I have duty of care to check documents ?

 

[STDFR33]

Teenage Girl may do it for the £20 a night, Girls more sensible at that age and teens always want petrol so £20 may come handy

Not sure how you would handle them as could be self employed but under tax limits, also insurance issues using car for business purposes

Rather than being referred to as a 'girl', they might prefer being referred to as 'young adult'.

 

[Mr D]

If I get them on a self employment basis do I have duty of care to check documents ?

Make very sure your relationship with them is self employed. You don't get to choose based on whats best for you, its chosen based on other factors.
Way too easy for a business to think its going to treat people as self employed when in reality they are workers or employees.
Not helped by government doing a review into what an employee is. So expect some changes.

 

[Chris Ashdown]

Rather than being referred to as a 'girl', they might prefer being referred to as 'young adult'.

I was being non PC in that Girls at teen age tend to be more reliable than teenage boys which generally is a fact although you naturally are not allowed to use this in selecting the best person for the job

 

[Mr D]

I was being non PC in that Girls at teen age tend to be more reliable than teenage boys which generally is a fact although you naturally are not allowed to use this in selecting the best person for the job

Teen girls (18+) tend to be better looking than the lads too.
Again cannot officially use this in selecting best person for the job unless you are interviewing for jobs at say the BBC or something.

 

[momon121]

I’ve negotiated with one driver that I am prepared to pay them £3 a delivery however since most deliveries are cash on delivery I was hoping to run the delivery services from 15:00 onwards till 16:30. My only struggle is when they deliver do I get the driver to pay me for the amount of order and whatever they recieve they keep or wait until all deliveries are complete and the customer pays the driver

 

[LiveNetworks Ltd]

Having run home deliveries on a similar basis, I can sympathise with you.

Third party companies like Hermes haven't been reliable or quick enough. Some delivered in 24 hours, some 5 days after they left us and one delivered over 100 miles away from where it was supposed to be.

Personal touch works and the 'delivered by a lovely young man', comments on facebook from customers is better than any advertising ££.

But, 2 hours out of the office every night. What could you be doing with that time? If being at home or in the office means you don't have to give the bookkeeper a stack of paper to sort out, or you spent an hour each day on your social media marketing, what you lose on the cost of a third party delivery could bring more benefits in cost savings or growing the business.

May be completely mad, but try say a local pharmacy or florist doing home delivery or even a local taxi company. Hermes and Yodel drivers are on sub £1 per delivery, you may even get one of them involved.

 

[Chris Ashdown]

Get them to pay by card either when they phone in or give the driver a mobile card reader, EBay do a cheap one i understand

 

[momon121]

Normally they pay me via PayPal or cash on delivery

 

[Chris Ashdown]

You would need to sort out what happens if money is missing on return to you

Many companies used to ask the secretary or someone else to bank their takings, the person was never insured to do so and any money missing for any reason makes you wonder about their integrity

Not as straight forward as first thought

 

[momon121]

Couldn’t agree more Chris. Unfortunately not everyone does online banking and have PayPal