How to Estimate Delivery Jobs: A Pricing Guide for Small Business
Estimating delivery jobs can be a tricky balancing act. You don’t want to charge too much and not get any work. Nor do you want to undercharge and make little to no profit, a situation that will quickly put you out of business. Read on to figure out how to set an hourly rate for delivery work, what costs you should factor in and how to charge for extra services.
Need a delivery estimate template? FreshBooks’ online estimating software makes generating and sending estimates easy. Plus, you can quickly convert them into invoices when the job’s done.
In this article, we’ll cover:
- Check the Competition
- Decide How Long the Job Will Take
- Know Your Hourly Rate
- Add Fees for Heavy or Bulky Packages
- Charge Extra for Rush or After-Hours Orders
- Include a Waiting Charge
1. Check the Competition
Call all the courier and delivery services near you or check their websites to get their rates. Find an average of all these rates. This is what you should aim for as your target hourly rate.
Just be aware that each delivery company has its own specific costs, such as vehicle maintenance or rent, that they need to cover and which are factored into their rates. What the average rate will tell you is how much customers are willing to pay for delivery in your area, says Profits on Wheels.
Don’t try to simply price lower than your competition as potential customers will be suspicious. You probably won’t be able to cover your overhead with really low rates either, meaning you’ll eventually go out of business.
2. Decide How Long the Job Will Take
Figure out how long the delivery will take. Waze and Google Maps will both estimate drive times based on traffic. Of course, this is just an estimated time. You will charge later based on how long the delivery actually took.
3. Know Your Hourly Rate
Use your competitors’ rates to determine your hourly rate. Let’s say your main competitor charges $15 for a 30 minute job. That means his hourly rate is $30.
Once you have an hourly rate, you can use this to price shorter or longer jobs. At $30 an hour, the per-minute fee is 50 cents. So if it takes an hour and 10 minutes to deliver a package, this would cost $35.
That said, you need to factor the costs of delivery and overhead and your desired profit margin into your hourly rate. Don’t set an hourly rate without knowing these factors.
First, you need to estimate the costs of delivery such as labor, gas, vehicle maintenance and insurance etc. You also need to know your overhead costs such as administrative staff salaries, office supplies, rent, utilities, marketing etc. Find out how much you’re spending weekly, divide this by the number of hours spent doing deliveries and then built this cost into your hourly rate.
Finally, you need to add a profit margin. At this point, you’ll know how much room you have left in your hourly rate for profit after adding up all your expenses. If profit is minimal, see how you can cut back on your expenses or decide if there’s wiggle room to raise your hourly rate slightly. And be aware that as your delivery business grow, you can also adjust your rates.
4. Add Fees for Heavy or Bulky Packages
Add an overweight fee to heavy or bulky packages. For example, you could charge a standard delivery fee for items 10 pounds and under and then charge 10 cents per pound over 10 pounds.
5. Charge Extra for Rush or After-Hours Orders
Charge extra for any last-minute or after-hours orders. For example, your standard rate could apply for two-hour delivery or pickup from 9 a.m. to 3 p.m. on weekdays. You could add a surcharge for one-hour delivery or delivery outside regular hours (charging even more for weekend or holiday pickup and delivery). Check your competitors’ rates to see how much they charge for these extras.
6. Include a Waiting Charge
Include on the estimate what you charge if the delivery person has to wait to pick up a package. Maybe the package isn’t ready yet or there’s some other delay at the pickup point.
You could include a policy in your estimate that you’ll wait five minutes, no charge. Beyond that, you’ll charge per minute spent waiting. So if your hourly rate is $30, that’s 50 cents per minute. If you wait 15 minutes for a package, that’s 10 minutes of waiting time and a surcharge of $5.
People also ask:
- How Much Do Delivery Drivers Make an Hour?
- How Much Do Amazon Delivery Drivers Get Paid?
- How Much Money Do Amazon Flex Drivers Make?
How Much Do Delivery Drivers Make an Hour?
Delivery truck drivers make $15.12 an hour on average in the U.S., according to the Bureau of Labor Statistics. The per hour rate ranges from $9.43 to $29.39.
Local messengers and local delivery workers make $16.74 per hour on average while couriers and express delivery service workers make $25.10 per hour on average.
How much delivery drivers make an hour also depends on location. Alaska, North Dakota, Washington, Massachusetts and Minnesota pay the most at $20.75 to $18.75 per hour.
How Much Do Amazon Delivery Drivers Get Paid?
Amazon delivery drivers get paid $12 to $25 per hour, according to Glassdoor. The average base pay is $18 per hour with average additional pay of $1,200 (this includes bonuses and tips). Average total pay is $38,000 per year.
How Much Money Do Amazon Flex Drivers Make?
Amazon Flex Drivers make $18 to $25 per hour, according to the Amazon Flex website. You can earn more with a larger vehicle that lets you deliver more packages, during peak delivery times and via tips.
You are paid in blocks of time. So for example, you could be assigned a 3.5 hour block of time. At $20 an hour, you’re paid $70. You earn the $70 whether you go under or over time.
Amazon caps the total number of hours you can work a day as a Flex driver so you’re still considered a contractor, not a full-time employee. So, this does limit your earning power. Here are the caps:
- Max per day: 7 hours
- Max per week: 29 hours
- Max per 30 days: 116 hours
That said, Amazon occasionally lifts these limits during busy periods like the Christmas season.