Saturday, June 23rd, 2018

When to Increase Prices


It isn’t always easy to determine pricing for courier services. Remaining competitive can often force the service provider to keep costs below the proverbial “break even” point.

This especially the case with a “startup” business, but things change significantly once the service has become well-established and built a client base.

It is at this point that a courier service owner may need to consider price increases to allow for profitability, expansion, or upgrades in equipment and staffing. Often this means that some customers will end their relationship with the business in order to retain the services of the “cheaper” provider.

The real trick is knowing when to let such a client go, and when to just increase prices across the board.

Let’s just take a quick look at the issues that directly impact the operating costs for a courier service. There is the cost of fuel for any transport vehicles, there is the need for various insurance policies to cover the packages and parcels in the event of an accident, there is the need to pay for employees or subcontractors, and there are the many costs associated with travel too (including tolls and parking fees).

These are not “static” prices that remain the same from year to year or even from month to month. A courier service cannot permanently absorb such expenses, and when they begin getting more business there is often the need to increase prices to meet the increasing operating costs too.

So, what this all adds up to is the need for the courier service owner to create a detailed business plan that includes a projected budget and plans for the future. This business plan absolutely must be reviewed on a regular basis in order to gauge if the courier service is performing as expected.

If so, the owner must follow the pre-determined plans for necessary price increases in order to remain competitive and to take on new clients as often as possible.