CompareShop money
Charge for delivery, or build it into your rate?
Your shop already delivers. The question is who pays: a named line on the bill, or a little inside every rate. Cost one trip first, then choose fairly.
How to decide who pays for delivery
- 1Cost one deliveryThe boy's time, the petrol, the counter nobody stood at, and the returns.
- 2Count a month of tripsAnd how many of them carried an order too small to pay for the ride.
- 3Find your break-even orderDelivery cost divided by your margin. Rs 75 at 15% is Rs 500.
- 4Set the free line at three times thatAbove it, delivery is free. Below it, it is charged.
- 5Charge a round figure just above costRs 80 for a Rs 75 trip. Never a figure copied from next door.
- 6Write both sides downThe cost as an expense, the charge as its own line on the bill.
Charge for delivery as its own line, and make it free above an order size you work out from your own numbers. Build it into your rates only when nearly every order leaves the shop on a bicycle. Before either, cost one delivery properly. Almost nobody has, and that is where the money leaks.
The number nobody has
Your shop delivers already. The only question here is who pays for it and how it shows. You cannot answer that until you know what one delivery costs you, and almost nobody does, because it never arrives as a bill. It arrives as a boy who is out, a motorcycle that wants petrol on Friday, and a customer who stood at the counter and left.
At 5:40 on a weekday evening, Saeed's general store has four people waiting and Bilal, the delivery boy, is nowhere. He left twenty minutes ago with two bags for a house three streets away. The customer counted her change twice, asked him to wait while she found a Rs 5,000 note, then sent him back for the eggs she forgot. Saeed serves four people alone and does not think about Bilal once. Ask him tomorrow what that delivery cost and he will say, "Nothing. The boy is on salary."
The cost has four parts.
The time. Bilal is paid whether he is at the counter or on the road, so his time feels free. It is not. Say he earns Rs 15,000 a month for about 250 hours: Rs 60 an hour. A delivery that takes half an hour door to door, with the waiting, is Rs 30 of wage. If you go yourself, price your own hour honestly, and it will be higher.
The fuel, or the bicycle. A motorcycle round trip inside the bazaar is small, say Rs 25 of petrol. A bicycle burns nothing, but a chain, two tyres and a puncture a month are real money over a year. Divide the year by the number of trips.
The counter nobody was standing at. While the boy is out, you are alone, or the shop is shut if you went yourself. Say one delivery in five means somebody waited, gave up, and bought his sugar next door. A Rs 300 sale at a 15% margin is Rs 45 of profit gone, spread across five trips: about Rs 10 a delivery.
The returns and mistakes that only happen on deliveries. Nobody at the counter takes the wrong packet home, because he is looking at it. On a delivery the boy picks the wrong brand, the customer is not home, the eggs arrive cracked, the change is short. Say one trip in twenty comes back, and a second trip costs another Rs 55. Spread across twenty, with the odd damaged item, call it Rs 10.
Say: what one delivery costs a shop
Example numbers, not a survey. If you shut the shop and go yourself, the third line becomes the biggest of the four and the total roughly doubles.
Rs 75 a trip. Put your own numbers into the same four lines; the figure will differ, but it will exist. A Rs 500 order at a 15% margin earns you Rs 75. Deliver it free and you worked for nothing. It is the kind of quiet cost that never reaches your real profit figure until you go looking for it.
The case for a separate charge
Policy A puts a line on the bill: goods Rs 1,240, delivery Rs 80. The customer who asked for the delivery pays for the delivery.
Four things follow.
The man who uses it pays for it. Nobody who walked to your shop is paying for the man who phoned. That is the fairest sentence in this article, and most customers agree with it when it is said plainly.
You can see whether delivery makes money or loses it: add up the delivery lines for a month and put them against the cost above. Without the line you are guessing forever.
A charge changes behaviour in exactly the direction you want. The customer who used to phone at eleven for tea and again at four for sugar phones once. Two Rs 300 trips become one Rs 600 trip: the same sales at half the cost. Nobody combines orders for a shop that delivers free.
Your counter price stays competitive. Your rate for a kilo of sugar matches the shop next door's, because nothing is hidden inside it.
The cost is one small awkwardness: sometimes a customer asks why. You will need the words, and they are further down this page.
The case for building it in
Policy B has no line. Every rate on every shelf is a little higher, the bill says goods Rs 1,280 and nothing else, and delivery is "free".
There is a real case for it, and shops that run it well are not fools.
No argument at the counter, ever. Nobody has ever asked why the sugar is Rs 5 dearer than it was. Everybody asks why there is a delivery charge. If you dread that conversation the way many shopkeepers dread a discount conversation, B removes it entirely.
"Free delivery" pulls customers in a way a charge never will. It is two words that go on the board outside, and they work on people who would never have ordered at all.
One rate is simpler. Your helper does not have to remember when to add the line, or how to defend it. The bill has one figure. The khata has one figure.
And a small rise spread across everything is invisible in a way a Rs 80 line on a bill is not. Three percent on sugar, tea, oil and soap is nothing anybody notices. Rs 80, printed and named, is noticed every time.
The bill your walk-in customers are quietly paying
Here is the honest cost of B, and most shops that run it have never said it out loud.
Under B, every customer pays for delivery, including the man who walked in, carried his own bag, and never once phoned. Say six out of every ten rupees of your sales are walk-in. Then six out of every ten rupees of your delivery money is coming from people who did not use the service. They are carrying the ones who did.
It also prices you above exactly the shop you worry about most. If the shop across the road does not deliver at all, then under B he is cheaper than you on every single item, for every customer who never asks for delivery. Not on one item. On all of them. That is a hard place to sit for a general store, where customers compare the rate of sugar between two shops out of habit, and setting a rate is already the hardest arithmetic in the shop without a hidden delivery cost inside it.
There is a worse version, and it is the one most shops actually run. B by accident: you deliver, you never raised a single rate for it, and you never worked out what it costs. The delivery money comes from your profit, and you find out at month end when the figure is smaller than the sales said.
Side by side
Two honest ways to pay for the same delivery
The fourth row decides it for most shops. If your customers compare counter prices with the shop next door, a hidden delivery cost inside your rates is a leak you cannot see and cannot defend. If they do not compare, because you are the only shop for three streets or nearly everything you sell is ordered by phone, B starts to look sensible.
A month of deliveries, two ways
Say one shop sells Rs 600,000 in a month at a 15% margin, so Rs 90,000 of gross profit before delivery. Delivery costs Rs 75 a trip, as worked out above. Today the shop makes about 260 trips a month, ten a day, and charges nothing, because nobody ever decided otherwise.
Say: one month, the same Rs 600,000 of sales, three ways
Example numbers only. Under "built in", about Rs 10,800 of the Rs 18,000 came from walk-in customers who never asked for a delivery.
Read the three blocks from the top. Free by accident is today: Rs 19,500 straight off the profit, and the shop believes it made Rs 90,000 when it kept Rs 70,500. Built in raises every rate by 3%, which brings in Rs 18,000 from every customer, but "free delivery" invites small orders, trips drift up to 300, and the shop keeps Rs 85,500 with counter prices now 3% above a shop that does not deliver. A separate charge of Rs 80 makes some customers combine orders, trips fall to 200, and the shop keeps Rs 91,000 with counter prices exactly where they were.
In this example, charging beats building it in by Rs 5,500 a month, and beats today by Rs 20,500. Nothing was sold that was not sold before. The only change is who paid for the motorcycle.
The middle path most shops should run
Neither pure policy suits most general stores. The one that does: free above a line, charged below it. Set the line from your own numbers, never from a figure somebody else invented.
Step one is your delivery cost, from the first section. Say Rs 75.
Step two is your margin. Say 15%.
Divide the first by the second: Rs 75 ÷ 0.15 = Rs 500. That is the order size at which a free delivery eats the entire profit; anything below it loses money on the doorstep.
Now multiply by three: Rs 1,500. Set your free line there. Above Rs 1,500, a delivery costs you at most a third of that order's margin, which you can carry. Below it, charge Rs 80, a round figure just above cost. If your margin is 10%, the same arithmetic gives Rs 750 and a free line of Rs 2,250. It is break-even thinking applied to one trip instead of the whole shop.
At 10:20 on a Monday morning Tariq's phone rings. A regular wants one packet of tea and a kilo of sugar, Rs 460, sent to the house. Under the old habit Tariq says yes and loses money on the trip. Now he says, "Rs 80 for the boy, or add what you need for the week and it comes free." The customer thinks for a second and adds oil, soap and rice. Rs 1,900, one trip, and both of them are better off than they were a minute ago.
The words to say. When a customer asks why there is a charge, say it once, plainly, without apology: "The rate on the shelf is the same for everyone, whether you walk in or phone. The Rs 80 is for the boy and the petrol to bring it to your door. Order over Rs 1,500 and I bring it for nothing." Then stop talking. Most customers hear it as fair, because it is.
So the recommendation: run the middle path. Two conditions flip it. If nearly every order you take is delivered, so that walk-in sales are a small slice and nobody compares your shelf price with anybody's, build it in and put "free delivery" on the board. If only one customer in ten ever asks for delivery, skip the threshold and simply charge, because nine customers should not be paying for the tenth.
Where the delivery money should show in your books
Whichever policy you choose, delivery has to appear somewhere, or it goes back to being a leak.
The cost goes in as an expense. Petrol, the puncture, the chain, in their own category, on the day they happen. The boy's wage is already there as salary. In Wasoolo, an expense written this way reaches the profit view beside rent and electricity, so at the end of the month "delivery" is a line you can read rather than a blur you can only suspect.
The charge goes on the bill as its own line. When Wasoolo prints the invoice, delivery sits under the goods as a separate line, so the customer sees exactly what he paid for, and you can add those lines up at month end against the expense.
And the khata entry shows what was actually agreed. When a customer takes a delivery on udhaar, the entry is goods Rs 1,240 plus delivery Rs 80, agreed on the phone and written before the boy leaves. When he questions it in a fortnight, the statement you share with him shows the Rs 80 line, not a mystery number. Wasoolo is 100% free to download, and none of this asks more than writing what happened while it is happening.
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Common questions
Will customers stop ordering if I add a delivery charge?
A few will grumble, and almost all of them will keep ordering, because the alternative is walking. What changes is that small orders combine into bigger ones. If you set a free line above a sensible order size, the customers who order properly never see the charge at all.
How much should the delivery charge be?
Just above your real cost per trip, rounded to a figure that is easy to say. If one delivery costs you Rs 75 in time, fuel, the counter and mistakes, Rs 80 is right and Rs 50 is a loss dressed as a charge. Never set it by copying the shop next door; his costs are not yours.
My boy delivers on a bicycle and I pay him anyway. Is delivery really costing me anything?
Yes, three ways. His half hour on the road is a half hour not at the counter. The customer who found only you, busy, and walked out is a lost sale. And returns and wrong items happen far more on deliveries than at the counter. Cost it once and you will stop calling it free.
Should udhaar customers pay the same delivery charge?
The same charge, written on the khata line at the moment it is agreed. "Goods Rs 1,240, delivery Rs 80, total Rs 1,320, yes?" Then it is part of the balance he agreed to, not a surprise on the statement. Delivery on udhaar is the costliest kind, because you carry the goods and then wait for the money too.
The shop across the road delivers free. Do I have to match him?
Ask where his "free" is coming from. Either it is inside his rates, so you can be cheaper than him on the shelf and charge below a line, or it is coming out of his pocket, so he is losing money and you should not race him there. A free line above a sensible order size answers him without copying him.
How do I record delivery so I can see whether it pays?
Two records, kept apart. Every petrol fill, puncture and chain goes in as an expense the day it happens, and every delivery charge goes on the bill as its own line. In Wasoolo the expense reaches the profit view and the bill line is on the invoice, so at the end of the month you put the two totals side by side and see which policy is winning.
Not sure what one delivery is costing your shop? Send us a message with how many trips you make in a week, and we will walk you to the number.