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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 critical, it should be ready before your business card. So, when you first enter the market as a new business, what is your plan? How much can I charge and still get business? Is it enough to make a profit and can I grow the business within that profit margin or just survive? Let’s look at some ideas.
Know Your Market. First you need to check the competition. What is the base price for local delivery and what is the per mile charge for delivery? Do they have different prices for Small Vehicles and Vans? (Trucks are a different pricing structure) Do they charge for Business? Do they fill the waiting time? Do they charge the weight and quantity of the package? What about additional stops in the same run? Do they include fuel surcharges, after hours surcharges, etc. into the bill and do they add late fees to past bills? Do some good detective work and get a copy of the price sheet if possible.
Base price: This is the price you charge for delivery usually within a 25 mile radius of your home base location. You can go 1 mile or the full 25 miles but the cost is the same. Many companies only use the base fee as their home city and use a flat rate for all Cities (depending on size, of course.) This is an important price, however, because often more than 50% of your business will be done here. If you are at this price or over-price “You Lose”.
Cost per Mile: This one has some bumps. Your cost per mile should be competitive and reflect the market you serve. Some areas get more per mile and some less. It depends on where you live. As of this writing, I see per mile costs from $1.35-$2.25 per mile in various areas. What you need to decide is what price your customers can afford, while allowing you to make a living, maintain maintenance and pay for gas. If you pick the wrong number “You Lose”.
Surcharges: There are different types of surcharges. The most common ones are fuel costs, After Hours surcharges, Extra People, Equipment, Airports, Holidays, etc.
Fuel surcharges are one of the most important in today’s environment. It’s there to keep your rate per mile stable while adjusting for rising fuel costs. At this time the average fuel surcharge is 15%-22%, depending on your market. It is a percentage that is added to the total basis of each delivery.
Next is the After Hours surcharge. It is common for companies to increase their fees by a percentage or a flat additional fee after regular business hours such as after 6PM to 6AM.
What about holiday surcharges? The best way to determine what holidays are is to use the schedule of the largest Courier Company in the World FedX. If they’re not running, you charge extra Holiday fees. Get the schedule from FedX and list those Holiday dates on the price list/sheet. The amount is generally a flat rate often $25 or more.
Airport surcharges: As a time-critical courier, you will often go to the airport to pick up or deliver. Airports can be a bottomless pit that drivers can get stuck in. Delayed flights, long lines, absent agents, forms to fill out correctly, everything takes extra time and effort. Therefore, you add an additional flat fee to the basic price, every time you go to the airport. It will often be $5-$25 depending on your situation.
Late Fees: Many companies feel that if they pay late fees, they will lose customers. I can’t deny that this can happen, but they better leave you with a debt of $100 instead of $5,000. It has happened to me with some of the best, so do what all the other vendors, charge if it is late, whether it is 30, 45 or 60 days, you have decided what your terms will be.
Try: Sometimes, you will come to pick up a package and it is not ready or you will send a package and no, you will be able to sign in and receive it. That’s the effort. It takes you as long to do as you do to complete the project, so you charge a fee for your time and effort. Most companies charge from 50% to 100% of the original price for a trial. Don’t do anything to customers here unless you feel you have to. Your time should also equal $$$$.
Additional Man/Equipment costs: For some deliveries, you may need some special equipment, such as furniture blankets, special hand trucks, ropes or lifts. This is all worth it to you and you need to pass it on to your customers. The amount to charge here varies too much for me to add suggestions but cover your costs and increase your profit percentage. Also, on some occasions, you may need to send extra people to help with the load. If you do, set a reasonable hourly rate and start the clock from the time they enter the vehicle until the job is completed and they return.
Weight and Number of Packages: When you charge a flat rate, you should consider that there is a weight limit on that rate before you add any charges. Also, the same applies to the number of packages. So in the price list/sheet, tell the customer what the limit is. For example, this price is good for the 1st 200 lbs. More than $00.?? each additional pound. Or equal to the number of packets. This price is good for the 1st 3 packages, after that $??.?? each additional package.
Additional Stops: If you take several packages in the same location to send to the same customer, they usually expect a break in price. Currently this only applies if they are in the same city or a 25 mile radius area eg. Usually charge 50% for additional delivery. If the delivery is to another area, then the full price is charged.
Wait Time: Delivery is not always like clockwork. That’s the time that the package isn’t ready when you arrive, that’s the time you have to wait for someone to sign in or can’t find someone to sign in. When the Wait Time starts. Typically, you allow customers 15 minutes per location to affect pickup or delivery. After you fill each minute Wait Time. The fee usually ranges from $30-$40 per hour divided by minutes.
Van Prices: All I will say at this point is that everything mentioned above, although it applies to small vehicles such as cars and small trucks, also applies to Vans. Besides, the base cost, mileage cost and some other additional costs need to be adjusted as the operating cost increases.
Keep the Price List updated at all times. Make it look neat and professional. Prepare to give often! Make sure it’s easy to read and give your customers what they need to choose you as a Courier Service.
All these additional costs must be listed in the price list/sheet and the customer must be aware of these costs. No surprises or “You Lose”.
So your Courier Service Business is the business that will dominate your market.
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