What should you charge for a delivery?
Most delivery pricing is copied from a competitor and quietly loses money. This starts from your own cost per drop, adds failed attempts, applies the margin you want, and tells you where free delivery stops paying for itself.
Charge per delivery
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Price from your cost, not from theirs
The most common way to price local delivery is to look at what the shop down the road charges and match it. That works only if their cost structure matches yours, which it almost never does — their radius, density, stop times and pay rates are all different.
Start from your own fully loaded cost per delivery. If you have not computed it, the cost per delivery calculator does it properly, including the payroll costs and idle time that make most estimates flattering.
Failed attempts are part of the price
Every failed delivery is paid for twice: the trip that failed and the retry, plus the call and the reschedule. At a 90% first-attempt rate, one delivery in ten carries roughly double the cost, which lifts your average cost per completed delivery by around 9%.
That is a real number and it belongs in your price. It is also the cheapest thing on this page to fix — first-attempt failures are usually a notification-timing or address-quality problem rather than a driver problem, and an arriving-soon message sent from a live ETA moves the rate measurably.
Free delivery is a discount, not a feature
Offering free delivery above a threshold means funding the delivery from product margin. The break-even order value is simply the point where gross margin on the order covers the delivery cost — below it, every free delivery is sold at a loss.
Setting the threshold slightly above break-even is the normal play: it protects the margin and nudges basket size at the same time. Setting it below break-even buys volume you would rather not have.
If the number is too high to charge
When your break-even charge lands above what customers will pay, raising the price is rarely the answer — density is. Most of your cost is fixed once a driver is out, so the route to a lower cost per drop runs through more completed stops per paid hour: tighter grouping, better sequencing, fewer failed attempts, less time lost at each door.
How much should I charge for local delivery?
Start from your fully loaded cost per delivery, not from what a competitor charges. Add the margin you need, then sanity-check the result against the local market. If your cost is above what customers will pay, the answer is usually density rather than a higher price — the same drivers completing more stops per hour.
Should delivery be free over a certain order value?
Free delivery is a discount funded from product margin, so the threshold has to sit above the order value where that margin covers the delivery cost. This calculator shows the break-even order value: below it, a free delivery is sold at a loss.
Should I charge by distance or a flat fee?
A flat fee inside a tight radius is simpler and converts better. Distance banding starts to pay once your radius is wide enough that the far stops are genuinely more expensive — usually when the longest drop is more than twice the average.
What about failed deliveries?
Price them in. A failed attempt costs you the trip plus the retry, and at a typical first-attempt rate of 90% that is a real addition to your average cost per completed delivery. This calculator includes it.
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Other numbers worth running.
These numbers, measured for you.
PrivateMile computes cost per delivery, stops per driver-hour and driver pay from work actually completed — not from the plan. 15-day trial, no card.
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