Stop Giving Away Your Margins: Why Delivery Should Cost What It’s Worth
This may be something that will be hard to hear: every time you offer “free” delivery on small orders, you are slowly killing your business.
We’ve worked with thousands of businesses since we started Trexity. Grocery stores, pharmacies, retail shops, liquor stores, meal prep companies, florists. You name it, we’ve delivered it (except hot food). The ones that thrive understand one simple truth: delivery costs money, and someone has to pay for it. The ones that struggle keep pretending they can absorb those costs and make it work somehow.
They can’t. And neither can you.
The Real Numbers
Here’s what it actually costs to get a package from your store to someone’s door. We charge between $7–12 per delivery within our cities depending on distance and timing. That covers our courier’s time, gas, vehicle maintenance, and the reality that we need to make money too.
But your costs don’t stop there. You’ve got packaging, the time your staff spends prepping orders, and the occasional redelivery when nobody’s home. Add it all up and you’re looking at $8–15 in real costs per delivery within any city.
If you are a grocery store with the typical razor-thin, sub 5% margins, offering free delivery just wiped out your profit on everything under $300. If you run a pharmacy, you are losing money on most orders under $75. The math is brutal.
I’ve watched many businesses convince themselves they can absorb these costs and make it up somewhere else. Volume will save them. Customer loyalty will compensate. Sadly it doesn’t work that way.
What Actually Happens
When you offer free delivery, you have two choices. Either increase your product prices to cover the cost, or eat the loss and hope for the best.
Most businesses choose option one without realizing it. They gradually raise prices across the board to subsidize delivery. The problem is, your customers notice. They compare your prices to the store down the street (or online) that charges $7 for delivery and has lower product prices.
Guess where they shop?
The businesses that choose option two just bleed out slowly. Every delivery order costs them money. They tell themselves it’s a marketing expense or a customer acquisition cost, but those customers never become profitable enough to justify the loss.
Your Customers Get It
This might surprise you, but your customers understand value better than you think they do.
When someone drives to your store, they’re spending gas money, time, and dealing with parking. The average shopping trip costs about $15 in time and vehicle expenses (without rush hour traffic or summer construction delays). A $7 delivery fee isn’t expensive compared to that. It’s convenient.
Here’s what we find surprising: instead of highlighting this value, businesses often feel the need to apologize for delivery fees, as if they’re doing something wrong. There’s no need to apologize for offering a service that truly saves customers time and money.
I’ve seen businesses that are upfront about delivery costs do better than ones that hide behind “free” shipping. Customers respect honesty. They’d rather pay a fair fee for good service than wonder what hidden costs are built into their product prices.
Even Amazon Charges for Delivery
Amazon figured this out years ago. They moved their free shipping threshold higher and higher until it basically disappeared for non-Prime members. Walmart, Loblaws, Home Depot and Canadian Tire all charge for delivery as well. Why?
These companies understand something that smaller businesses seem to forget: sustainable economics matter more than short-term customer acquisition.
The businesses we work with that thrive have clear delivery policies. They set minimum order thresholds that make sense for their margins. They explain the value they’re providing. They don’t apologize for charging what the service costs.
Finding Your Number
Every business needs to run their own math here. Take your average margin, figure out what delivery actually costs you, and set a minimum order threshold that works.
If you are making 20% margins and delivery costs $10, you need at least $50 in product to break even. Make your free delivery threshold $75 so you actually make money.
If you are in a low-margin business like grocery, your threshold might need to be $150 or higher. That’s not unreasonable. That’s sustainable.
And if customers don’t want to hit that threshold? Charge them the delivery fee. Most will pay it. The ones who won’t weren’t going to be profitable customers anyway.
The Bottom Line
We’re not trying to make your life harder. We want the businesses we work with to succeed and success means making money, not just moving product.
Delivery isn’t free and never was, so let’s stop pretending it is. Charge what it costs, explain the value, and focus on building a business that actually works.
Your customers will respect you for it. Your margins will thank you. And your business will be around long enough to serve those customers for years to come.