How much does a dedicated courier cost, and what should you benchmark it against?
By Muhamed Selmani, Founder
How much a dedicated courier costs is whatever the miles, the vehicle class, the door time, the return leg and the route type add up to. There is no market average worth quoting, and a cost-per-drop figure means nothing without the drop density behind it. Build the benchmark from your own invoices: split fixed from variable, count drops and miles, then compare like rounds. Report cost per drop next to drops per vehicle-day, or it is not evidence.
There is no market average, and this piece will not invent one
There is no honest general figure for what a drop should cost. Anyone quoting one is selling something, or repeating a figure they have not checked.
A cost per drop is a quotient. Underneath it sit the drops on the round, the miles between them, the minutes at the door, the vehicle class, the window and the part of London it runs in. Two operations can report the same figure and run nothing alike; two identical ones can differ because one counts the empty return leg and the other buries it in the mileage rate.
What is useful is a method that makes your own numbers comparable, built from data you already hold.
How courier and contract pricing is calculated
A price you can compare is a price you can take apart. These are the seven lines to look for, and providers differ in which they show and which they fold into one figure.
The seven lines inside a delivery price
- Distance, per mile, against the vehicle class the load needs.
- Time at the door: loading and waiting by the minute, usually with an allowance.
- The return leg. Some rate cards price it; some bury it in the mileage rate.
- Route type. Scheduled, multi-drop, retained standby, same-day and urgent are different products at different prices.
- Out-of-hours, weekend and bank holiday uplifts.
- Pass-through charges: zone charges, tolls, and a fuel surcharge where one applies.
- A minimum charge — why a short route costs more per mile than a long one.
One published example, and it is not a market rate
Here is a real rate card to read the shape from. These are Fleetable's own rates, not an industry benchmark.
The shape matters more than the figures: a price that cannot be taken apart into those seven lines cannot be benchmarked or forecast.
- Per mile by vehicle class, ex VAT, across 6 classes: from £1.10 for a bike to £3.20 for a 7.5-tonne lorry.
- Loading and waiting at £0.45 a minute ex VAT, with 15 minutes included on loading and 15 on waiting.
- The empty return leg at 50% of the outbound miles.
- Route type as a multiplier: multi-drop +10%, standby +15%, dedicated cold chain +20%, same-day +25%, urgent +50%.
- Out-of-hours and weekend work at +20%.
- The two Transport for London charges at cost: congestion charge £18 a day in the central zone, and ULEZ £12.50 a day on a non-compliant vehicle up to and including 3.5 tonnes.
- Above 3.5 tonnes that ULEZ charge does not apply. Transport for London's Low Emission Zone is the separate scheme in play there, with its own standards and charges, and this rate card carries no line for it.
- A minimum charge of £95 ex VAT a route.
Build the benchmark from your own invoices
Your own history is the better benchmark: it is measured on your sites, windows and volumes.
What to pull, and what to compute
- Twelve months of invoices, one row per charge line rather than one per invoice.
- Split each line into fixed and variable: would it still be billed in a week with no deliveries?
- Count the drops those invoices bought, from your delivery notes rather than the invoice: the two disagree more often than anyone expects. Count the miles.
- Separate the extras: waiting, out-of-hours calls, failed drops, redeliveries, zone charges.
- Then compute four ratios: cost per drop, cost per site per week, extras as a share of the base rate, drops per vehicle-day.
The fourth ratio makes the other three mean something
Drops per vehicle-day is the density behind your cost per drop. Report the two together, and never compare your cost per drop with another operation's unless both numbers are on the table. Then repeat it for a month you know was bad: a benchmark from a good month is a target you will miss for reasons unconnected to your provider.
Worked example
Cost per drop, and what the number hides
Assumptions
- A round of 6 drops, and the same round with 2 sites closed. Assumed volumes.
- A route total of £180 ex VAT for the full round. An assumed figure, chosen to keep the division legible: not a quote, not the output of any rate card, not a market rate.
- A minimum charge of £95 ex VAT a route — Fleetable's published floor, and a real number.
Working
- Full round: £180 / 6 drops = £30.00 a drop.
- With 2 sites closed, miles barely changed: £180 / 4 drops = £45.00 a drop.
- The same route reduced to a single drop bills at the floor: £95 / 1 = £95.00 a drop.
- Same provider, same rate card, same vehicle, same streets. Three figures, none of them wrong.
So: Cost per drop measures density as much as price. Track it against your drops-per-vehicle-day, and compare quotes with it only for the same round on the same days.
Logistics as a percentage of food cost
This is the ratio finance leads ask for most, and it travels worst between businesses. The distortion that ruins it is delivered-in pricing: when a supplier delivers without charging separately, that cost sits inside the price of the goods, on your food line rather than your logistics line. Move a category from a delivered supplier to a collected one and the ratio worsens while your total cost falls.
So treat it as a tracking measure. Measure it monthly against yourself, per site and per category, and hold the denominator still: decide once whether it is food purchases at cost or total revenue.
Surcharges, and the fuel question
A rate without its surcharge mechanism is not a rate. A fuel surcharge is a mechanism rather than a figure: it moves a rate you have already agreed, on a trigger and a cadence set in the contract, so the number you signed can change without anyone renegotiating. That is not a trick — fuel moves faster than a contract — and a provider with no surcharge line has priced that risk into the base rate or is absorbing it. Ask which of the two it is.
Five questions that settle a surcharge
- How is it expressed: a percentage on the base rate, a figure per mile, or its own invoice line?
- Which index does it track, and where is that index published?
- How often is it reviewed, and are you told before it moves?
- Which lines does it apply to: mileage only, or the whole invoice?
- Does it come down as well as up, and is there a floor or ceiling?
Open book is not the same as an itemised rate
The two get used interchangeably in tenders and they are different. Open book means the provider discloses its cost base and an agreed margin on top: you are buying visibility of what the work costs them. Itemised means it shows what you are charged for without showing what those lines cost it: you are buying a price you can decompose.
A provider advertising transparent pricing may mean either, so ask which before you set two of them side by side. If your tender requires open book, say so at the first meeting rather than a round later: it is a qualifying question, not a detail.
They need different questions. Under open book: the cost model, the margin, the review mechanism, the audit right. Under an itemised rate: the rate card, the surcharge mechanism, the minimum charge, and what the invoice does when a drop fails. Under either, ask what covers third-party damage and what covers the load: different policies, and one insurance figure answers only one of them.
Where the money actually is
The levers are not equally sized, and are usually pulled in the wrong order. A rate cut of a few percent on a badly shaped round is worth less than one more drop on it.
In order of how much they move
- Density. Drops per vehicle-day is the largest lever, and it belongs to you rather than your provider.
- The window. One nobody has questioned in years is often why a round is shaped badly.
- Frequency: fewer, larger deliveries wherever shelf life and storage allow.
- Vehicle class, set on the peak day not the average.
- The failure lines — waiting, redeliveries, out-of-hours calls — usually symptoms of the four above.
- The rate itself, last. The smallest lever, and the easiest one to reach for.
Where Fleetable stands on the questions above
A piece that spends its length telling you what to ask should answer the same questions about itself. Fleetable prices closed book and itemises the charge, and says so in those words rather than taking the label that sells better. Its published rate card carries no fuel-surcharge line. The two Transport for London charges are passed through at cost, because they are Transport for London's numbers rather than Fleetable's, and a route outside the zone pays neither.
It publishes no standard review cadence or notice period either, and says so rather than leaving the gap silent. Those belong in a contract written for the size of the commitment.
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