Delivery Pricing Calculator 2025/26
Set profitable delivery charges for your business based on distance, parcel weight, vehicle running costs and your target margin. Calculate the true cost per delivery and the minimum charge needed to cover costs at different service levels.
Key Inputs
- Average delivery distance (km) per drop
- Average number of drops per vehicle per day
- Vehicle running cost (p/km) — or use HMRC approved rate of 45p/mile (28p/km) for company vehicles
- Driver hourly cost (£/hr) including employer NI at 15% and pension
- Average working hours per delivery day
- Parcel weight (kg) and dimensions for carrier rate comparison
- Target gross margin on delivery revenue (%)
What You'll Get
- True cost per delivery (£) — fully loaded including driver time, fuel, vehicle depreciation
- Minimum delivery charge to break even (£)
- Recommended delivery charge with target margin (£)
- Cost per km and cost per drop hour
- Comparison: own-fleet vs outsourced carrier (Royal Mail, DPD, Hermes/Evri rates)
Important Notes — 2025/26 Rates & Caveats
UK delivery cost benchmarks 2025: diesel van running cost approximately 50-70p/km fully loaded (fuel, insurance, depreciation, tyres, servicing). HMRC approved mileage rate: 45p/mile (28p/km) for the first 10,000 miles — acceptable for tax but may understate true costs for high-mileage fleets. Fleet total cost of ownership for a diesel van: approximately 60-70p/mile or 37-43p/km at typical 2025/26 fuel and finance costs. Outsourced carrier rates for 2025: Royal Mail Tracked 48 from £3.35 (up to 1kg); DPD Parcel from £4.50 (up to 5kg); economy next-day from £6-8. Own delivery becomes cost-competitive for dense local routes with multiple drops per hour.
Frequently Asked Questions
When is it cheaper to use own-fleet delivery vs a courier?
Own-fleet delivery becomes cost-competitive when you achieve a high number of drops per vehicle-hour in a defined local area — typically 4-6 drops per hour for urban delivery. At 5 drops/hr with a driver cost of £18/hr and van cost of 40p/km, each delivery costs approximately £4.60 — competitive with courier rates for parcels under 2kg. For sparse rural routes or low-volume operations, outsourcing to Royal Mail, DPD or Evri is almost always cheaper than owning a vehicle.
What is the HMRC approved mileage rate for delivery vehicles?
The HMRC Approved Mileage Allowance Payment (AMAP) rate for cars and vans is 45p per mile for the first 10,000 miles in a tax year, then 25p per mile. This rate is accepted by HMRC as a reasonable reimbursement for business mileage without needing receipts — it covers fuel, depreciation and running costs. For delivery businesses, the actual cost per mile often exceeds the AMAP rate for high-mileage or diesel vehicles; in that case, claiming actual costs through the company accounts is more tax-efficient.
Should I offer free delivery and build the cost into product prices?
Free delivery increases conversion rates significantly — research shows 60-70% of UK online shoppers abandon baskets due to unexpected delivery charges. If your average basket value is high enough, absorbing delivery costs into product pricing is viable. Rule of thumb: free delivery works when delivery cost is less than 5% of average order value. For lower-value orders, a free delivery threshold (e.g. "free over £40") drives basket-size increase while limiting exposure to loss-making orders.
Related Calculators
Use the interactive Delivery Pricing Calculator
Run real numbers instantly — free, no sign-up required.
Go to Operations Calculators