How to Charge for Delivery Services

delivery to the space needle image by Leticia Wilson from Fotolia.com

Every aspect of business operations costs money. From opening the door and turning on lights to managing an advertisement campaign, money is spent. To help pay for these expenses, consumers are charged for specific actions or the cost of operations is added to product overhead. Some businesses charge specifically for delivery services. These businesses are usually involved heavily with delivery-specific operations and range from large freight companies to messengers who provide courier services and deliver small items by bicycle.

Establish categories of delivery expenses by method. Some products may require truck delivery while others may be delivered using a company car. If possible use multiple methods to keep costs of delivery operations low. If selling multiple products, such as wholesale groceries, a business may use refrigerated trucks and dry storage trucks, which have different costs for operating. A refrigerated truck requires more fuel to operate and has additional maintenance costs.

Categorize products by method of delivery. Take the time and separate products by size and frequency to determine the most efficient means of delivery. A wine importer may rely on a freight truck for delivery of product to high-volume consumers while using sales staff to deliver individual cases to clients giving smaller orders. Unless necessary, avoid using high-expense delivery methods for small deliveries.

Determine the operations cost of equipment. Maintenance, fuel and time of operation, and the number of operators and delivery personnel, all need to be taken into account. Each aspect of delivery has a price tag that a business must pay. To adequately determine the cost of operation, add the hourly wages of delivery personnel and hourly fuel and maintenance costs. If renting a delivery truck, be sure to include hourly rental expenses.

If two delivery personnel are used at $15 per hour each, fuel costs are $12 per hour and truck rental is $18 per hour, the average hourly cost for delivery operations is $60.

Divide the hourly cost for delivery operations by the number of deliveries made each hour. If three deliveries are made and the cost of hourly operations is $60, then the average cost for delivery is $20.

Invoice customers. Include as a separate line on invoices the cost for delivery. This provides consumers with an accurate breakdown of what they are really paying for their product. Clients and consumers appreciate this as they can then include this in their own cost of operations.

Warnings

  • Unless a business is specifically a delivery service, trying to profit from delivery services can quickly ruin the reputation of a business. Inflated business charges are easily identified by consumers.

References

About the Author

James G. Pradke began writing freelance in 2010 and currently authors the "Clarion Post." Areas of particular expertise include education, small business, arts, international travel, and home and garden. Pradke possesses a Master of Arts in international peace and conflict resolution from American Military University.

Photo Credits

  • delivery to the space needle image by Leticia Wilson from Fotolia.com