Pricing is one of the most consequential decisions in a courier business,and one of the least discussed. Most operators price based on gut feel, what competitors charge, or what they were doing when they started. That leads to jobs that don't cover costs, inconsistent quotes, and money left on the table.
Here's a framework for building delivery pricing that actually works.
Start with your cost floor
Before you can price profitably, you need to know what a job actually costs you. The main variables:
- Fuel cost per mile. Your vehicle's MPG and local fuel prices give you a per-mile fuel cost. If you're getting 20 MPG and fuel is $3.50/gallon, that's $0.175/mile just in fuel.
- Vehicle depreciation and maintenance. Commercial vehicles depreciate fast. A rough rule: add $0.15-0.25/mile to account for wear, maintenance, and eventual replacement.
- Driver time. What's your effective hourly rate when you account for driving, loading/unloading, and administrative time? A job that takes 90 minutes at your target rate of $30/hour costs you $45 in labor before expenses.
- Insurance and overhead. Commercial auto insurance, business insurance, software, and other fixed costs need to be spread across your job volume.
Add these up and you have your cost floor,the minimum you need to charge to break even on any given job. Everything above that is margin.
Structure your pricing
Most effective courier pricing has three components:
Base rate per mile
A per-mile rate that covers fuel, vehicle costs, and driver time for the driving portion of the job. For local courier work, this typically ranges from $1.50 to $3.50/mile depending on market, vehicle type, and service level. Calculate yours based on your actual costs plus target margin.
Minimum charge
Jobs under a few miles don't generate enough revenue at per-mile rates to justify the time involved. A minimum charge (commonly $25-50 depending on market) ensures short local runs are still worth doing. Set this based on the minimum time you'd spend on any job, priced at your effective hourly rate.
Surcharges for extras
Additional services or conditions that add real cost to a job should have corresponding fees:
- After-hours or weekend delivery
- Stairs or elevator-required delivery
- Inside delivery (vs. curbside)
- Oversized or heavy items
- Rush/priority service
- Signature required or chain of custody documentation
Each of these adds time or complexity. Price them accordingly rather than absorbing the cost into your base rate.
Stay competitive without racing to the bottom
Knowing what competitors charge is useful context, but pricing to beat the lowest competitor is a race you don't want to win. Instead:
- Know your market rate range (low, mid, premium)
- Position based on your actual strengths (reliability, specialization, relationships)
- Price to your target customers,not everyone, just the ones you want to serve
Premium clients,law firms, healthcare providers, financial institutions,often prefer to pay more for reliability and accountability than to find the cheapest option. Compete on value in those segments, not price.
Make your pricing easy to understand
Complex pricing creates friction. If customers can't quickly understand what they'll pay, they hesitate or don't book. The solution: an online quote tool that applies your pricing rules automatically and gives customers an instant estimate without requiring them to understand the formula.
This also eliminates inconsistency,every customer gets the same price for the same job, which builds trust and reduces negotiation.
Set up your pricing structure in Qalt and automate your quotes,free for 14 days.