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3 Questions You Must Ask Before Starting a Delivery Company

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Starting a delivery company can be a great way for people to venture out into the world of small business. Anyone thinking about starting a courier service needs to consider three basic questions as they get going.

What will you carry?

The first step in determining your business model is to figure out what type of parcels you would like to deliver. First, you will need to settle on either business or residential deliveries, or a combination of the two.

Think about what types of services you would like to offer.

If you would like to focus on fast, secure deliveries, it probably makes sense to work mostly with businesses. But if you are also offering packaging and printing services, you can also be of service to individuals who may not send packages so frequently.

It’s also important to consider what types of packages you are going to deliver.

If you have a mid-sized vehicle, for example, you won’t be able to transport packages that are too large. If you cannot offer extremely fast service, it may not make sense to deliver envelopes for businesses that need fast transportation of documents.

Where will you carry it?

The next consideration should be your business area. This will depend on how much business you expect to have in the local area and also how much capacity you have for longer-distance travel.

If you have multiple employees, traveling outside of the immediate area is much easier.

If you are working by yourself, on the other hand, it may be more difficult to visit multiple locations that are far from each other every day.

The volume and speed of your business should be determining factors. Don’t guarantee fast delivery if you need to travel all over the area every day. But if you don’t have enough business in the immediate area, it might pay to expand.

How much will you charge?

The pricing of your services should be based on a combination of the above considerations. First, take a look at the prices of your competitors.

Keep in mind that big companies like UPS have a very different business model from the one you are using for your courier service, so you don’t need to model your prices on theirs.

It makes more sense for you to consider the prices of businesses that are similar to yours in terms of scale and your service area.

The baseline of your price should be the mileage covered for each delivery.

Set a certain price for deliveries in the local area, and think about raising that price slightly for deliveries that require traveling a longer distance.

Also, factor in flat rates for standard envelopes and packages, along with additional fees for larger parcels.

You will also need to set up pricing for special situations, such as those that take place after hours or require express delivery.

Posted by on Monday, February 18, 2013 at 7:42 pm 
Filed under Start Up · Tagged with ,

  • I am thinking of doing courier work of documents and small packages, how much should I charge the client? How should I dress? I will be prospecting law firms, engineers, medical labs.

  • David Martinez

    I don’t really know what to charge for long distance deliveries.

    For example: If I’m delivering a new 4 wheeler to someone in Los Angeles,CA from Spokane,WA.

    That is 1,217 miles.

    Do I Charge something like $1 a mile ?

    Someone please advise me.

    Thank you.

  • keisha

    hello i live in charlotte & im thinking about starting my own courier service whats the best way to do it independent contracting or self owned

  • Suanne

    I am moving to Colorado in the fall and would like to start a courier business, however the closest town ( 25 miles) is small, approx 2000 people. There are quite a few businesses, but will that support a 1 person courier service? Thanks Suanne

  • Kim M

    are messengers and couriers the same

  • Kim M

    I’m a legal process server, should I incorporate both together courier since they are both delivery service

  • Patrick Moroney

    Pricing really comes down to what your overheads are going to be. Operational costs can be kept very low for start up courier operations in comparison to established larger businesses.

    The larger companies have considerable operating costs compared to a small outfit that may start with just a few vans and a truck. This is a big advantage with your pricing.

    One of the biggest mistakes is starting out with to large a warehouse that you need to keep paying every month. Choose your depot wisely.

    However, even though you might start up with low pricing, there are lots of add on charges you can offer to your clients. People are prepared to pay for that extra service.

    Things like 2hr or 4hr pick up and delivery, same day delivery, specialty packaging, white glove service, immediate pick up and delivery. These are just a few suggestions, there are many add ons you can offer your customers to increase the base take.

    All the best with your endeavours.

    • wmhammons

      “Things like 2hr or 4hr pick up and delivery, same day delivery, specialty packaging, white glove service, immediate pick up and delivery. These are just a few suggestions, there are many add ons you can offer your customers to increase the base take.”

      And how does one figure out those fees? using the Inside-Out Approach for example.

      • The Inside-Out Approach, being based on your actual expenses, isn’t going to give you much insight when it comes to value-added services like rush or after-hours deliveries.

        What you could do is treat them as “time-and-a-half” for your hourly wage if you are using the IOA. But, ultimately, it comes down to what it’s worth to you. If you’re well-established and have steady income streams, it may take a higher hourly wage to get you out of bed to make a delivery at 2 a.m..

        When you’re just starting out, however, it may be that the extra income is more important and you’re willing to do more for competitive prices.

        Focus on what it’s worth to you and what the competition charges — if you can find a balance in there, you should be fine. Remember that ultimately your best price is as high as the client will pay while still feeling like they are getting an excellent value. The better the value they feel they are getting, the more likely they are to use you again.

        It’s worth pointing out, however, that “value” and “low price” are very often different things. This is where the money is.

      • Deon Victor

        i just lost my work in Mozambique and want to start courier business,how is the package prices worked out,i need to setup my business plan asap and need help,can u direct me to a website.