Gas prices - raising delivery charge

[Registered_Guest]

When gas prices went over $3.00 per gallon we raised our delivery charge from $1.99 to $2.49 - and raised our driver comp from .75 to $1.00.

Now that gas prices are approaching $4.00 in our area (and I bet will be over $4.00 in the next couple of weeks) - I’m thinking of raising delivery again to $2.95 and giving all of that raise to the driver comp making it $1.46.

I don’t think that many people will percieve a difference between $2.49 and $2.95. $3+ I think they would see a difference.

Anyone else doing anything with delivery charges due to gas prices? At $4 per gallon, it is costing our drivers between $1.10 and $1.30 in gas (on average @ 20 mpg) per delivery. I’ve always believed that comp should cover at LEAST the true cost of gas. Doubles reduce this somewhat, but again on average.

 

[Piper]

Yes, we are going to be increasing. We’re at the same level as you and will also be raising 50 cents. But at $2.49, our drivers are getting $1.50 per order and will get $2.00 after the increase. I think we should not only be covering the cost of their fuel, but also putting a dent in the true cost of operating a vehicle.

The IRS is currently using 48.5 cents per mile for vehicle operation costs. With your 5.5 mile average, that would cost your driver $2.67 per order.

That’s high, because the IRS uses the depreciation for a new vehicle. But I bet it’s still over $2.00 for your drivers per run.

That 48.5 cents per mile also doesn’t factor in $4.00 gas!

 

[sweetp1265]

The reimbursement rate was upped to 50.5 for 2008.

 

[15thStreetPizzaandPu]

wow…“RG” we have always had free delivery and had to go to $1.25 delivery charge. unless drivers are going crazy I think you should stay where you are at. if you are lower than everyone else there is a small possobility they choose you over than the competitor but if you keep giving them the same product consistantly over and over again they will come back again after “shopping” the competition

 

[Registered_Guest]

We are not lower than anyone as far as I know. In fact, our delivery charge is close to double what the big three charge in our area.

 

[pizzaguy]

Dont bend to the pressure of doing what the cometition does you need to make money and so do your drivers if your product is good and you have loyal customers you will do fine on the other hand if your customers are just sattisfied you may lose a few of those ones but they already go elswhere anyways. cover your cost on delivery people will understand after all thats one of the reasons they arent coming to pick it up!

 

[NicksPizza]

Preach on, brother pizzaguy! We have to look first at our business model, costs and business plan. Decide if it it makes sense for our business . . . then peek at the marketplace to see what impact the decisions may have (that could include comparing to the competition as a piece of this). Ultimately, make the decision that is best for YOUR business; period. Then be willing to bail out if it has unintended or unplanned consequences

If I want to slow the delivery side of my business, I will add to the price just above what I think the market will bear. Those who really want delivery will pay it, and the fence sitters will more often choose pick-up or dine-in. If I want to
accelerate deliveries, I’ll drop just below what I think I need to make and go for the economy of scale.

 

[wa_dave]

With prices of gas going through the roof and getting higher everyday (now over $7 a gallon = $1.55 litre in Western Australia) we have altered some destinations to higher charge zone. If prices of petrol continue to rise then we will increase our delivery charge by 50 cents per zone and so on as price rises happen.

The problem with petrol prices going up people will ask for home delivery more and more as they won’t want to use their cars to pick up pizzas.

Now is the time for everyone to stop being the benevolent society with free delivery and start charging for a service that costs you something do. In the time I have been on this site it has dumbfounded me that in the US that many operators see it as a paramount to not charge customers for a service that costs you money to operate. To me it comes down to if it costs me to do it then the customer gets charged.

Maybe the cost of petrol, increasing wages and all the other associated costs will now be recouped in all fairness by charging for a service you give. Ask your customers if they would work for nothing and I know what the answer would be.

Dave