Define a comparable operating contract
Inputs and assumptions to record
- Billable-delivery definition and failed-attempt treatment. (not complete)
- Included route geography, time window and stop range. (not complete)
- Complete route cost and step costs. (not complete)
- Low/base/high attempted and completed stop cases. (not complete)
- Waiting, redelivery, excess-stop and fuel/toll adjustment terms. (not complete)
route contribution = route charge or (billable deliveries × delivery price) - complete route cost
- billable deliveries
- Events meeting the reviewed billing definition (deliveries per route) — delivery and contract record
- route charge
- Customer price for the defined route scope (CU per route) — business pricing scenario
- complete route cost
- Dispatch, driver, vehicle, stop handling, waiting and failure cost (CU per route) — route cost record
Use one currency, indirect-tax basis, attribution rule and time horizon. All numbers below are invented currency units (CU), not forecasts or benchmarks.
Worked example: Price Per Delivery vs Price Per Route
Invented route costs 300 CU. Structure A charges 17 CU per completed delivery; Structure B charges 390 CU per defined route.
| Line | Calculation | Result |
|---|---|---|
| A at 22 completions | 22 × 17 | 374 CU revenue |
| A contribution | 374 - 300 | 74 CU |
| B contribution | 390 - 300 | 90 CU |
| Difference | 90 - 74 | B ahead 16 CU |
| Case | Changed input | Result |
|---|---|---|
| 18 completions | A 306 revenue; B 390 | A 6 / B 90 CU |
| 22 completions | Base | A 74 / B 90 CU |
| 26 completions | A 442 revenue; B 390 | A 142 / B 90 CU |
Use the result without hiding uncertainty
- Freeze one route scope and billing event.
- Build complete route cost.
- Calculate both structures at aligned completion cases.
- Add excess, waiting and failed-attempt rules.
- Review who controls density and risk.
- Reconcile invoice events and actual route cost.
- Comparing prices at different route scopes.
- Using attempted stops as billable without contract support.
- Omitting capacity-step cost at high density.
- Ignoring waiting and redelivery.
- Calling a mathematical crossover a demand forecast.
Questions before committing
- Can a hybrid structure work?
- Yes. Model a route minimum plus per-delivery or excess-stop amount as a third case with explicit triggers.
- Who benefits from route density?
- That depends on the price structure and who controls routing; calculate the retained contribution rather than assuming.
- What should be on the invoice?
- Use observable events and reviewed wording that match the commercial model and local requirements.
Sources and methodology
- Price Per Delivery vs Price Per Route: primary calculation methodology — Margin101: Owns editable calculation, units, assumptions and validation boundaries.
- Manage your finances — U.S. Small Business Administration: General record context only; no delivery rate or contract term is prescribed.
Model the next decision
- Shipping Profitability Planner
Choose a shipping charge after weighted delivery costs
- Fulfilment Cost Comparison Planner
Compare self-fulfilment and third-party cost contracts at a chosen order volume
- Minimum Order Value Planner
Set a profitable order floor