A question we get asked on a pretty regular basis is “How to charge for deliveries”, so this week I thought we would have a look at the various delivery pricing models and strategies for calculating the costs.
There are a few delivery price models:
- Free or Included Delivery
- Flat Rate Delivery Cost
- Delivery Cost based on Suburb
- Free Delivery to local Suburbs and flat rate to all other Suburbs
- Variation of Different Costs per listed suburbs and flat rate to all others
- Custom Calculations
- Special Event Pricing
Free or Included Delivery
Free or included delivery in the cost of the product is a common choice for florists. Consumers are price driven and one of the key reasons for cart abandonment is delivery price.
Technically you are not offering free delivery but “included” delivery as the price has been built into the product pricing model already.
Flat Rate Delivery
Flat rate delivery is a very popular choice for florists, and is probably the easiest for most florists to work out and also set up.
I’ve done a quick guide below to explain how to work out how to calculate the best flat rate fee.
Delivery Cost based on Suburb
A very popular way of charging for deliveries for florists is to have different costs for different suburbs. This model is especially popular for towns or geographic areas where the distance between two suburbs can be quite large and cost more.
To use this model however you will need to list EVERY suburb that you deliver to along with the cost for delivery.
Generally in this model you will limit your delivery area to only the suburbs listed.
Free Delivery to local Suburbs and flat rate to all other Suburbs
Another popular model is to set your local delivery suburbs as a zero cost for delivery and then have a flat rate for all other suburbs.
This though does mean that technically you will accept all delivery locations which is not always practical.
Variation of Different Costs per listed suburbs and flat rate to all others
A variation on the two models above is to have suburbs listed in the system with individual costs and then a flat rate for all other suburbs.
This model is useful when you are in a regional area with a large delivery area with different costs for delivery but you also want to deliver flowers nationally for example.
Custom Calculations
Of course not everyone wants to use the standard delivery calculations and instead they want a more customized delivery option. Some people use courier services and have real time on demand pricing.
Some charge more for time of day deliveries.
Some charge more based on what time of day the order is made for same day deliveries.
The options for custom delivery charges are nearly endless and can be built into your site and business!
Special Event Pricing
Another small but growing way to charge for delivery is to charge an extra fee for Special Events such as Valentine’s or Mother’s Day.
Sort of like a special event surcharge in addition to the normal fee.
Calculating a Flat Rate or Included Cost Delivery
If you do charge a flat rate how do you calculate a cost so you don’t lose money?
Flat rate delivery costs are generally based on a rate that your competitors charge and a calculation of the average charge for delivery.
You can work out the latter yourself.
Start by finding the number of deliveries that you have done in a period, say a week for good measure.
Then add up all the costs for couriers, drivers etc in that week. Don’t forget if you do your own deliveries to calculate how much this costs as well.
So say for example you had 100 deliveries in the week.
You spent:
$500 on couriers
$300 on your internal drivers
$200 cost against your own time and use of your van
Total $1000 on delivery costs
$1000 / 100 Deliveries = $10 a delivery charge
So your average delivery charge is $10.
Admittedly it’s not that simple to work out but you get the idea.
Calculating your delivery fees based on your competitors
Calculating a delivery fee can also be done based on what your competitors are charging. If you are one of a couple of florists in an area and they are all charge $15 for delivery and you are charging $20 then you may be losing sales.
However if your deliveries are actually costing you an average of $20, then a pricing strategy may be to increase your product costs by $5 and match the $15 delivery fee.
Remember you still need to make money on each order.
Which is the best Model for Delivery cost?
There really is no best model for charging delivery apart from making sure you are not losing money on the delivery costs.
For ease of set up the Flat Rate or Included Delivery require the least amount of work.
Most florists though charge some form of delivery and if you are a smaller florist it’s important that you charge a reasonable charge to your costs.
For my money though I would recommend entering a cost for each suburb that you want to deliver to AND limiting the delivery to only these areas.
If you want to set up your Flower Store In a Box Website with the one of the various delivery options contact one of our team!
