Industry sector: Business services

Courier service: Pricing policy

How will you decide on your prices?

Getting the price right is very important. You must make sure that the price you charge is high enough to cover all of your operating costs, including your own drawings. But bear in mind that the courier industry is very competitive and you will have to price in line with your immediate competitors unless you are targeting a niche market that your competitors do not cater for.

Calculating the price of a job

Many courier firms set a minimum charge per delivery. This might vary depending on the size of the vehicle used. On top of this, it is usual to charge a set price per loaded mile - again, rates vary depending on the type of vehicle. You need to consider the running costs of your vehicle when setting the price per mile, but you must also bear in mind your competitors' rates - you don't want to price yourself out of the market. Also bear in mind that on many deliveries you will incur 'there and back' costs - these can be offset if you can combine a number of drops (or get a return load) and work out an efficient route from one drop to the next, but sometimes you will inevitably find yourself driving extra 'non-paying' miles that need to be covered by someone's delivery charges so that you don't end up making a loss on the job.

Some firms use satnav to calculate the distance between collection and delivery points and use this mileage to work out the charge. Alternatively, you may decide on a fixed fee for popular routes - for example from London to Heathrow Airport or from Leeds to Manchester. Whichever method you use, the overall pattern is the same - the longer the journey, the higher the charge. On top of this basic fee, a separate charge might be made for extra drops, or if the driver has to wait to collect a return document or delivery.

You might also decide to charge extra for deliveries made at night, on Bank Holidays or at the weekend.

Bear in mind that fuel prices can increase very quickly - make sure you review your charges regularly to make sure you're covering your costs.

Remember that potential customers will appreciate a friendly, efficient and polite service, and will be prepared to pay a fair price. But they'll also be aware of the prices charged by your competitors, so bear this in mind when working out what to charge. If you bid for work on websites like Shiply and Anyvan then you'll need to make sure that your prices are competitive if you want to win jobs.

Special offers and discounts

You might decide to offer a one-off introductory discount to all new customers to encourage new business. You could also offer a discount for regular daily or weekly delivery work. How much discount will depend on your pricing policy and the level of local competition.