Bohman on Pricing: Home delivery carriers offer many pricing options
By Ray Bohman -- Logistics Management, 1/1/2009
During the many years I’ve been writing this column, I never discussed pricing options offered by for-hire carriers that specialize in making deliveries to private residences, apartments, dormitories and similar type of premises.
We’re not talking here about the likes of UPS Ground, FedEx Ground, or the U.S. Postal Service, but for-hire home-delivery carriers that primarily specialize in delivering larger size products such as new furniture, kitchen cabinets, appliances, etc. You’ll find these carriers in every major city in the U.S.
A handful serving the furniture industry cover the entire country such as Home Direct USA, based in Hillside, Ill., and Mainstreet Delivery headquartered in Green Bay, Wis. These are non-asset-based companies using small, independent home delivery carriers scattered throughout the U. S. and in some instances, Puerto Rico. Other carriers, such as Purnell Furniture Services, headquartered in Manassas, Va., and Cory Home Delivery out of Secaucus, N.J. are regional in territorial coverage and handle much of the East Coast.
Many of these companies got their start by going into retailers and taking over the warehousing and home-delivery operations that the retailers had long been performing with their own drivers and delivery vehicles. The one unique thing about these carriers is the wide variety of pricing options that they can offer their customers, be they retail stores, catalog companies, or companies selling over the internet. Below are some of those pricing options.
Varying according to different size products: An excellent example is furniture delivery carriers that make a separate charge for a sofa, a lower one for chairs, and yet a different charge for set-up tables.
As a percent of invoice price: Some of their customers want a set percent of their invoice to cover the cost of delivery, making it easier to quote a delivered price.
By the cube of the product: A notable example is the delivery of kitchen cabinets. Actually, there are two different pricing methods offered—one for delivery to the customer’s garage and the other for unpacking it and bringing it into the kitchen.
Per package, with the charge varying by weight: Some of these home delivery carriers are delivering packages in competition with UPS Ground, FedEx Ground, and the USPS, many times at a very competitive price.
Varying according to the value of the product: For example, home delivery carriers serving the furniture industry have customers selling high-priced furniture, other customers dealing in medium-priced products, and still others offering low-end lines. These carriers charge a smaller fixed percent to customers with high-end lines, an even higher fixed percent on medium-priced lines, and yet an even higher fixed percent on customers in the low-end priced furniture business.
The vast majority of for-hire home delivery carriers price their service with a fixed price delivery to points within a set delivery zone, such as a radius of 50 miles. If they make deliveries to points beyond that zone, a higher charge applies.
Extra charges are assessed for performing “deluxing” prior to delivery—touching up scratched surfaces, polishing, etc. Assembly of a product once it is in the home, such as a bedroom set, is another type of additional charge.
Author’s Note: I wish to take this opportunity to thank Richard Purnell and Bill Contaxis of Purnell Furniture Services, Manassas, Va., for their help in preparing this column.
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