How is cost per drop calculated?
The calculator adds up one working day and divides it by the drops in that day:
- Fuel per day = miles per day ÷ miles per gallon × 4.54609 (litres in a UK gallon) × fuel price per litre.
- Total cost per day = fuel per day + driver cost per day + vehicle cost per day + other costs per day.
- Cost per drop = total cost per day ÷ drops per day. This is also your break-even price: charge less and each drop loses money.
- Price at target margin = cost per drop ÷ (1 − margin ÷ 100).
- Cost per mile = total cost per day ÷ miles per day.
Worked example with the starting values: 120 miles at 40 mpg uses 13.6 litres, which at £1.45 a litre is £19.78 of fuel. Add £120 for the driver, £35 for the vehicle and £10 of other costs: £184.78 a day. Over 25 drops that is £7.39 a drop, so a 20% margin needs a price of £9.24 a drop.
What to put in each box
- Driver cost: for employees, gross pay plus employer National Insurance, pension contributions and holiday pay, spread over the days they work. For self-employed drivers, the day rate you pay.
- Vehicle cost: lease or finance payments (or depreciation if you own the van), insurance, road tax, servicing, tyres and repairs, divided by working days.
- Other costs: phones, software, parking, congestion or clean-air charges, fines and a share of office costs.
- Drops per day: successful deliveries only. Failed attempts cost the same as a drop but earn nothing, so use the number you actually complete.
Using the number
Cost per drop tells you which work pays. Run it separately for different kinds of round: a dense urban round with 40 drops and a rural run with 12 can have very different costs per drop even when the day costs the same. If a customer’s rate is close to your break-even price, that work is only worth having if it fills gaps in an existing round.
The two levers that move cost per drop most are drops per day and failed attempts. A customer who can see a live tracking link knows when to be in, and a driver who is not stopping to answer “where are you?” calls has more time for drops. For a fuller treatment, read how to price courier deliveries.