Guide
Price local delivery from what each delivery costs, not one flat fee, and that starts with seeing the whole picture: what the customer paid, what the run cost, who drove it and how it ended. Cost moves with distance, address type, weight and urgency, so a flat fee overcharges nearby customers and loses money on far, heavy and commercial orders. Keep the fee a small share of the cart, offer more than one option, and use more than a couple of fleets, because each one covers and prices differently. At 67 Wine, a case sold with $11.99 flat-rate delivery cost $22 to deliver. Pricing to true cost cut shipping unit costs 11% and lifted shipping unit revenue 6%.
The two sides of checkout
Every delivery has two numbers: what the customer paid for it at checkout, and what it cost to deliver. The gap is the delivery deficit. Most tools only see one of the two. To stop losing money you have to see and manage both: the price the customer sees and the cost of the run.
$11.99
customer paid
$22.00
delivery cost
$10.01
deficit on one order
A 36 lb case of wine at 67 Wine, before repricing.
Cost drivers
Six things decide it. A flat fee ignores all of them.
Third-party fleets price by the mile. An order across the river can cost several times one down the block, while a flat fee charges both the same.
Offices and other commercial receivers keep set hours, often are not expecting the order, and sometimes need paperwork or a trip upstairs. At 67 Wine they went return-to-sender three times as often as home deliveries.
A case of wine or a piece of furniture needs a bigger vehicle or more time at the door than a bag of groceries.
Delivery within two hours costs more than a delivery that can wait for a batched run later in the day.
In-house drivers, per-mile third-party fleets and local carriers each have their own cost structure. The cheapest one changes from order to order.
A delivery that fails or comes back is paid for again. At Myers of Keswick, 4 deliveries out of 5 used to arrive when the customer was not home.
Geography
Where you deliver moves the price more than almost anything else. Cities tend to fall into three cost tiers, and inside each city fleets add zones: zone 1 is the dense core, zone 2 the inner neighborhoods, and zone 3 and beyond the outer areas and suburbs, each a step up.
Higher cost
Pay rules for app-based couriers (New York City's minimum pay rule, Seattle's PayUp law, California's Prop 22), plus traffic, parking and tight access.
Middle
Dense and costly to drive and park in, but without the pay rules that push the top tier up.
Lower cost
Plenty of drivers, easier parking and longer, faster roads, so the same distance costs less.
Tiers reflect what drives courier cost in each market: pay rules for app-based couriers, density, traffic and parking. Exact prices vary by fleet, distance, vehicle and time of day, which is why Getcho quotes every order across fleets.
Delivery options
Every fleet has its own coverage, prices and gaps. With only one or two, some areas go unserved and the cost of every run is whatever they charge. With more options, each order goes to the one that fits it. Range is where it pays: at Minus Moonshine, local delivery customers live 7.2 miles from the store on average against 3.8 miles for pickup customers, a 4x larger area.
Local orders went to gig drivers, and most gig drivers would not go from Brooklyn to Manhattan. Adding local carriers alongside the national couriers, with the range set by which drivers will reliably take the run, had Manhattan customers ordering delivery within a few days.
Read the storyOnly one of the fleets on its old setup could reach New Jersey, so the store had switched New Jersey off. With more fleets, including local carriers, it now serves twice as many postal codes and a 30% larger population, at 40% lower shipping costs.
Read the storyIts own drivers made a weekly, fixed-fee run to Brooklyn. Third-party fleets with larger service areas now deliver to Brooklyn and Queens every day for less, and orders there tripled.
Read the storyWhat works
A premium option, such as your own driver or a white-glove run, next to a standard option on third-party fleets. Say up front which is which, so customers choose knowing what they get.
Look at the delivery fee as a share of the order. Subsidizing delivery on a large cart can pay for itself; a small rush order should carry a premium.
Charge more by default for commercial addresses and buildings without a doorman. Doorman buildings, virtual doormen and package rooms are the easiest drops. Address intelligence tells you which is which before the driver leaves.
Price one zip lower to grow volume there until a batched run or your own driver makes sense, and price farther zips higher.
If you run drivers, model what each stop costs you today. That number decides which orders stay in house and which go to a third-party fleet.
Pay rules for app-based couriers in cities like New York, Los Angeles and Seattle make courier runs cost more there, so one national price per mile does not hold.
Comparison
| Model | Good at | Where it loses money |
|---|---|---|
| One flat fee | Simple to explain | Loses money on far, heavy and commercial orders; overcharges nearby customers |
| Distance tiers or zones | Tracks distance, easy to set by zip or radius | Ignores weight, address type and urgency |
| Base fee plus per mile | Follows how fleets charge | Hard for customers to predict; still blind to address and size |
| Minimum order for delivery | Keeps tiny orders from losing money | Turns away small first orders that could become regulars |
| Free over a threshold | Lifts basket size | Gives delivery away on the large orders that usually cost the most to deliver |
| Speed tiers (ASAP, same-day, scheduled) | Customers pay for the speed they choose | Needs real cost per tier to set the gaps right |
| Built into product prices | Low or no visible fee at checkout | Overcharges pickup and nearby customers; hides the cost from you too |
| Priced options by address and speed | Each order covers its own cost; customers choose | Needs cost data per zip, address type and speed |
What shoppers will pay
Less than it costs, on average, which is why the gap has to be managed on purpose. Shoppers are sensitive to the fee as a share of what they are buying, and they punish failed deliveries harder than high fees.
#1
reason shoppers abandon checkout is extra costs like shipping and fees, cited by 40% of those who leave.
Baymard Institute, 2026
2 in 3
shoppers abandon the cart entirely when shipping fees climb past about $10.
AlixPartners Home Delivery Survey, 2026
52%
of shoppers would stop buying from a retailer after one or two botched deliveries.
AlixPartners Home Delivery Survey, 2026
~80%
of the average delivery cost is what the average delivery fee covers, leaving the rest to the merchant.
Capgemini, cited by the USPS Office of Inspector General
7 to 8%
of basket value is roughly where same-day delivery fees stop putting shoppers off.
McKinsey
Shopify
Shopify's own local delivery setting covers simple zones and order-value rules. It does not know what a delivery will cost, so it can't price by address, size or speed.
| Shopify Local Delivery | With Getcho | |
|---|---|---|
| Zones | Up to 10 per location, by radius (up to 100 miles) or postal codes | Zones by zip or radius per location, priced by distance, address and speed |
| Price rules | Up to 3 per zone, based on order value | Live carrier rates per order, from what the delivery will cost |
| Overlapping zones | The customer gets the lowest fee | Each order priced for its own address |
| Speed and time slots | No speed tiers or time slots | ASAP, same-day, scheduled and one-hour slots |
| Time of day | Not part of the Local Delivery setting | Prices, rate names and descriptions that change by time of day, like a lunch rush or after-cutoff |
| Which products | Not part of the Local Delivery setting | Allow lists and block lists by product, tag or collection |
| Which store ships | Not part of the Local Delivery setting | Routes each order to the right store or warehouse, with transfers when one store lacks an item |
| Who delivers | You arrange the driver | Your drivers and courier fleets, booked automatically |
| Fleet rules | Not part of the Local Delivery setting | Workflows per fleet, like sending bulky orders to a van or evenings to your own driver |
| After the order | Not part of the Local Delivery setting | Delivery analysis on every order: photos, timing, problems caught and claims filed |
| Shopify POS | Not part of the Local Delivery setting | Book, scan, track and cancel deliveries from the register |
Shopify details from the Shopify Help Center.
Step by step
Put each delivery in one view: what the customer paid, what the run cost, who drove it, the zip code, the address type, the order size and how it ended. Use actual rates, not estimates.
Example: 67 Wine modeled the true cost of every delivery across its own drivers, per-mile fleets and local carriers before changing a single price. Story
Subtract what the customer paid for delivery from what it cost. List the biggest gaps, especially low-margin orders with a high deficit, and look for the pattern behind them.
Example: At 67 Wine, corporate gifts were priced like home deliveries but cost more and went return-to-sender three times as often. Story
One or two fleets leave whole areas uncovered and leave you paying whatever they charge. Line up in-house drivers, per-mile fleets and local carriers, and send each order to the one that fits it.
Example: Myers of Keswick doubled the postal codes it serves once it had fleets that could reach New Jersey. Story
Set delivery prices in proportion to cost. Commercial addresses and far zips should not be priced like a home down the street.
Example: 67 Wine now prices every option for the customer's zip code and address type. Story
Offer options such as ASAP, scheduled and white-glove, each priced to cover its cost, and let customers pick a delivery date that they will be home for.
Example: Myers of Keswick lets customers choose their delivery date at checkout, which cut failed deliveries and the order issue rate 30x. Story
Rates and order mix change. Recheck which deliveries lose money every month and adjust prices, range and fleets.
Example: Minus Moonshine set its range by which drivers will reliably take the run, then widened it as Manhattan orders came in. Story
In their numbers
67 Wine
11% lower costs, 3x orders
Shipping unit costs down 11%, shipping unit revenue up 6%, orders in Brooklyn and Queens tripled, and no loss-making local deliveries left.
Myers of Keswick
40% lower costs
Order issues down 30x to 0.1%, twice as many postal codes served, and conversion up 24%.
Eataly
30% lower costs
Lower last-mile delivery costs.
Minus Moonshine
Brooklyn to Manhattan
Same-day delivery into Manhattan within days, and both stores now selling online instead of one.
Results from individual customers. Yours depend on your locations, lanes and order mix.
FAQ
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Explore More
Guide
Pickup times, zones, vehicles and fixes.
Case Study
Delivery priced to what it actually costs.
Case Study
Taking a second store online, same-day into Manhattan.
Field Note
When to use your own drivers and when to send it out.
What business customers are saying
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By Evandro Nadal, COO, Getcho · Last updated: