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Rates per mile on delivery

Fassback
Day-tripper II

I don’t like to gouge the customers on delivery fees but with the cost of fuel now days what is everyone charging? I’m changing $3.50 In California is this high or reasonable

11 REPLIES 11

Keithf3z
Day-tripper II

You're really generous! That rate is low in my opinion.  I'll crunch some numbers to explain. First you have to account for the way Outdoorsy calculates milage. Actually, their whole milage thing is a little weird and nonintuitive in my opinion but I'll get into that later. 

So, the way the milage charge is done in Outdoorsy only accounts for the first leg of the trip. But you still have to drive home, then back to the drop off location then back home again.  So, you actually drive 4 times the distance which means $3.50 divided by 4 = 87.5 cents per mile is what you're really charging.  But then you have to factor in wear and tear on your tow vehicle. Depending on your tow vehicle, wear and tear (which includes gas) can be anywhere from 35 cents per mile up to 50 cents per mile.  And that's just driving, not towing, so 35 cents per mile is a really low figure. For what's it's worth I believe the federal reimbursement rate right now is somewhere around 58 cents per mile, so we'll be working with really low figures in the following examples. Now we take the 87.5 cents per mile we were charging and subtract wear and tear. 87.5 - 35 = 52.5 cents per mile.  Sounds like we're still on top right? But don't forget to factor in your personal time to drive. In the numbers above we've determined that you're actually making, on the high end since we used a really low wear and tear number, 52.5 cents per mile. If you deliver 25 miles away, you actually drive 100 miles, so your payout is $52.50 for driving. A 100-mile trip (in total, 25 X 4 legs), if everything goes well, will probably take about 2 hours depending on traffic, route taken, speed limits, etc. and hooking and unhooking your rig. So, now take your delivery charge of $52.50 and divide by 2 hours = $26.25 per hour to drive. Not bad. but keep in mind, how often does everything go exactly as planned.  There are lots of factors that can add time to your trip like accidents, long lines at campgrounds or festivals, road construction, etc. Maybe something doesn't go exactly as planned when you're deploying your rig....  So, let's say it takes you 3 hours instead. Now you're down to 17.50 per hour for your time. In California you're not much above minimum wage now.  And please remember these numbers are using a VERY low wear and tear cost. I know in parts of California gas is approaching $10 per gallon so the wear and tear cost is MUCH higher.  In reality a 3-hour trip would likely put you well below minimum wage for your time. 

There are multiple ways to handle this which brings us back to the weird way Outdoorsy does their whole mileage thing that I mentioned earlier. In the Delivery Charges section of your Pricing tab, it says "What maximum distance are you willing to deliver and pickup?" and then there is a Cost Per Mile and a Minimum Delivery Fee.  When you ask me "What maximum distance are you willing to deliver and pickup?" I take that to mean if I say I'm willing to drive a max of 100 miles and then a renter asks me to deliver 200 miles then Outdoorsy would say "this owner isn't willing to deliver that far. sorry".  After all I said the MAX I'm willing to drive is 100 miles. But what this really means is "how far are you willing to drive before you start charging an additional mileage fee". The Cost Per Mile field is that additional charge per mile amount. So lets say you put 25 miles as your max mileage and a Cost Per Mile of $10 and no minimum charge.  If a renter asks you to deliver 25 miles away or less then you are actually delivering for free.  

To account for that I think a lot people put in a max mileage and then do the math for the minimum charge.  For example, you could do 25 max miles with a $100 minimum charge and then let's say $3.50 Cost Per Mile.  In that case if a renter asks you to drive 25 miles you're actually getting $4 per mile (remember though, 4 legs minus wear and tear would actually be 65 cents per mile when broken down).  With this method, your payout increases when a renter stays under your max mileage.

I've also heard of some owners who charge a mileage rate but then charge a per hour fee for getting stuck in traffic or lines at campgrounds or festivals.  That way they can preserve their pay per hour of driving as the cost per mile doesn't get errored by unforeseen delays.

Or you could combine the methods too.

In my case I set Cost Per Mile pretty high and a max distance of 1 mile and no minimum charge.  So basically, the first mile is free and then a flat rate after that. Right now, I like this method personally since I don't have to deal with someone thinking they're getting ripped off or questioning whether or not I'm being honest when I say I had to wait in traffic or in some line for an hour.

I'm sure with some Googling time you can find more specific wear and tear numbers for your vehicle where you're located and that may give you a better idea of where you want to set your Max Miles, Cost Per Mile, and Minimum Delivery Fee. But with gas getting close to $10 per gallon in some areas of California and bans on building new gas stations... things are probably going to stay pretty high there and I don't think charging $5 per miles is unreasonable when you factor in all the actual costs.

Hope that helps and best of luck!

WOW! You shared so much info here. Truly appreciate the time you took to really lay this out.  It helps when responding to renters that are so confused on how we assess our fees. THANK YOU!!!!

This was really helpful! I think we're considering your method of a flat fee per mile to keep it simple and easy to understand. My follow up question is, if you only have a 1 mile in there as a max distance to deliver, are you getting renters checking you out for delivery if they wan to go say 30 miles away?

I've only had one delivery requested so far. But as soon as I explained the rate, the renter was good with it. All the other rentals I've had have been picked up and dropped off by the renter. But that is also my preference since I have a full-time job as well so it's difficult for me to arrange drop off and pickup without paying another family member or friend to do it for me.

VagabondKaren
Weekend warrior II

I agree that is really low - we charge $6/mile and I will probably be upping it to $7/mile for the remainder of the season. Keep in mind that Outdoorsy only calculates mileage charges for delivery one way.  I would definitely up your price.  I would think you would be loosing money on delivery at $3.50/mile

mdefendis
Day-tripper

I think we are set at $4.50 a mile, if people can't understand the need to increase the fee then they need help....not only the cost of gas in CA is crazy but our time to deliver it worth something as well. 

kneverett
Day-tripper II

Does Outdoorsy take their commission on the delivery fee, in addition to the nightly rate?  If so, then when your delivery fee is $200, you are not really getting $200 in your pocket to cover your delivery cost.  And if Outdoorsy is deducting a commission from delivery fees, they are getting a huge windfall from owners having to increase delivery fees to cover increased fuel costs.

Outdoorsy takes their commission on anything that is charged to the renter when the booking is made - rental fee, add ons, mileage, delivery fee etc.  I make sure that I am priced correctly to account for this. 

Thanks for confirming.  I thought Outdoorsy took a cut from delivery also but was not 100% certain.  At one time I was considering offering an add-on to include a package of ground coffee from Black Rock Coffee.  I was going to donate part of the proceeds of that item to a veteran support charity such as Wounded Warriors or DAV.  But by the time I price in the 20% cut by Outdoorsy and my actual cost of the product, I decided it's not worth doing.

And I don't think the extensive analysis posted earlier took into account that owners only get 80% of the delivery fee charged to the renter.

You're right! I forgot to deduct Outdoorsys percentage right off the top. That would pretty much ensure you're losing money at $3.50 a mile. Good catch.

don_hancock
Day-tripper II

I agree with Keith: you have to look at making TWO round trips (four directions for the same trip - and two of them are loaded!). My truck gets about 9MPG when fully loaded. So a 25 mile delivery is actually 50 loaded miles and 50 empty miles. Plus, I always mention that I'll level and setup the trailer, too. So there's time for that. I charge $5/mile; and while that sounds initially expensive, when I explain it to the renter they seem to understand. For a 25 mile delivery I'd net $50 for a few hours' work (after commission and fuel) NOT counting wear and tear. Sounds like you don't get much for your work, but it's costing them $125 for you to "only drive 25 miles." Not a lot of takers.