How Much Should You Charge For Delivery Per Mile

$1 to $3 per mile is what you should charge. However, the pricing range may vary depending on the delivery type and business model. While determining the delivery cost, also factor in fuel cost, maintenance cost, driver wages, and the profit margin. It is understandable how difficult it would be to determine a delivery cost, especially if you are new to the delivery industry.

What you ought to do is keep an eye on your competitor’s offerings and pricing and execute the pricing strategy considering the consumer’s demands, peak seasons, and other crucial factors.

In the process, make sure you charge somewhat more on delivery orders in order to meet your profit goals. Importantly, you need to finalize how much money you want to collect from customers.

Businesses with hybrid delivery models can consider automation software to make an effective pricing strategy based on real-time data and keep track of delivery costs.

How to Calculate Charge for Delivery Business

Check out the four steps below that will help you calculate the delivery cost correctly.

1. Competitor Analysis

Compile a list of delivery and courier services around you and discover what are their current delivery charges. Next, contribute your time to market research to identify the ongoing trends in the delivery industry and decide whether your delivery cost justifies the market conditions. See, it is what you are aiming for in terms of delivery charges.

Therefore, analysis of competitors and deep market research will give you an idea of what average delivery fee you should consider on every order. This step is important not only in setting delivery charges but also in making strategic decisions to get a competitive edge.

2. Factor in Delivery Time

There are many aspects you should take into account when calculating the delivery charge. The delivery time is one of those factors which ensures you add a correct delivery fee. Therefore, find how much time is required to ship the item from the warehouse to the customer’s location. Accordingly, you can decide what to charge when delivering customer orders.

Sometimes, the delivery location might be out of your service area. In such cases, you can include extra fees per kilometer. Likewise, if the delivery order is likely to take 2-3 days, then consider charging a high delivery fee.

3. Consider Profit Margin

Profit margin is something you never want to miss out on because it can affect your business profits. So, calculate the profit margin as well. As per the industry standard, you can set the profit margin in a way that doesn’t affect your bottom line and keeps the buyer satisfied.

So, once you have finalized what will be the delivery charge, next find out the profit margin. For example, if you want to put 20% as the profit margin on a $1.80 delivery cost, then the total amount you will charge for delivery would be $2.16.

4. Levied Extra Fees (if required)

At this point, you might be ready with the delivery charges for the normal days, but what about peak hours or deliveries on weekends? You need to create a separate strategy if you are serving buyers on off days or during peak hours. In this case, as a delivery business owner, you have the full right to levy additional fees on the delivery order.

So, if you are planning to perform deliveries outside of your normal working hours, include a surcharge. Likewise, you can include additional fees when you perform deliveries on national holidays or during festivals. If required, follow what your competitors’ pricing is and decide how much you should charge extra.

What Is the Importance of Calculating the Delivery Charge?

Calculating the delivery charge before shipping the customer’s order is crucial in any delivery business. Here’s why.

1. Maximize Profits

Adding the right delivery charge for delivery means you make sure your business covers all expenses while maintaining a profit. Costs like vehicle gas, driver wages, and other overheads can quickly add up. Also, neither you can undercharge, which may lead to losses. Thus, calculating the right delivery charge makes a difference in earning a profit.

2. Stay Competitive

Secondly, it plays a significant role in making your delivery business thrive so you can gain a competitive edge. For that, you need to analyze the pricing of your competitors and make an informed decision about delivery charges, ensuring you stay competitive irrespective of changes in delivery trends.

3. Handle Peak Season Efficiently

Calculating the delivery charge matters amid the peak hours when sales are high. You need to calculate the delivery charge and make a solid pricing strategy to address peak season challenges and collect a fair delivery fee from customers. As a result, you can prevent financial strain while maintaining your service quality.

Why Do You Need Moon Invoice for Delivery Business?

Whether you are a new player or have been running a delivery business for a while, at some point, you need someone to handle invoicing and administrative work.

Moon Invoice, cutting-edge invoicing software, is a one-size-fits-all solution for modern businesses, helping them save time creating professional invoices and managing their finances.

With state-of-the-art features, Moon Invoice has transformed the invoicing and estimating process so that delivery businesses (like yours) can focus on enhancing customer experience.

Of course, there are gazillions of invoicing & accounting software, but how does Moon Invoice stand out? Simply because of user-friendliness, unmatched customizability, cross-platform compatibility, and dedicated customer support.

You can hand over your invoicing tasks to Moon Invoice carefree and prepare delivery invoices, delivery notes, or delivery receipts professionally. What’s next? You get paid promptly and set yourself free from chasing unpaid invoices.

Some Moon Invoice features make it count as long as you strive for business growth.

✅Automated invoicing
✅Customizable invoice templates
✅Sales reports
✅20+ Payment integrations
✅Expense tracker
✅Credit notes
✅Time tracker
✅Multi-project management
✅Cloud storage

Grab a free trial to check out more features before you purchase an invoicing plan that meets your business needs. Notably, we also offer a 90-day money-back guarantee if you’re not satisfied. So, why wait? make a switch now.

Conclusion

As we bring down the curtains on this blog, let’s summarize the major takeaways. First, you can charge $1-$3 for every delivery you perform. Second, competitor analysis and maintaining the correct profit margin will aid you in calculating the delivery charge. Now you also know why calculating delivery charges matters.

And lastly, how invoicing software like Moon Invoice has been a game-changer for delivery businesses. You know the perks, right? So, how soon are you migrating to Moon Invoice? – Get in touch with our customer support for easy onboarding.

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