Cost per Delivery is a metric that shows how much it costs, on average, to complete one delivery. It is usually calculated by taking total last‑mile delivery costs, such as driver wages, fuel, vehicle costs, technology, and support, and dividing that figure by the number of deliveries in a given period. Tracking this number helps delivery teams see whether changes in routes, staffing, or service levels are making delivery more or less expensive over time.
What is Cost per Delivery?
Cost per Delivery, sometimes called delivery cost per order or cost per drop, measures the average cost of fulfilling one delivery from depot to customer. It is one of the core KPIs used to understand last‑mile economics alongside on‑time rate, first‑attempt success, and capacity use.
A simple formula is:
Cost per Delivery = Total Last‑Mile Delivery Costs ÷ Total Deliveries
Total delivery costs usually include driver wages, fuel, vehicle maintenance and leasing, insurance, packaging, routing and delivery software, depot handling, and a share of customer support and management overhead. Some businesses also include reverse logistics and the cost of failed deliveries when they calculate this number, especially if failed attempts are common.
Cost per Delivery can be calculated for the whole fleet or broken down by region, service type, vehicle, or customer segment to see where operations are most and least efficient.
What Cost per Delivery is an important last mile metric
Cost per Delivery directly affects margins, especially when consumers expect low or free shipping. In many sectors, last‑mile delivery already accounts for more than half of total shipping costs, so small changes in cost per drop can have a large impact on overall profit.
High delivery costs often come from under‑used routes, long distances, failed deliveries, and inefficient planning. Businesses that improve route efficiency, increase stop density, and raise first‑attempt success can bring cost per delivery down while maintaining or improving service levels.
By tracking this KPI over time, you can see whether changes such as adding new delivery areas, offering narrower time windows, or switching carriers are making deliveries more or less expensive, and adjust your delivery model or pricing accordingly.
How SmartRoutes helps reduce Cost per Delivery
SmartRoutes helps lower Cost per Delivery by optimizing how routes are planned and executed. Route optimization and smart scheduling cut total distance and fuel use, which directly reduces one of the largest variable cost components in last‑mile delivery. Better route planning also lets drivers complete more stops per shift, spreading fixed labor and vehicle costs over more deliveries.
Features such as accurate ETAs, route tracking, and proof of delivery improve first‑attempt success and reduce costly failed deliveries and repeat visits. Customer notifications and clearer delivery expectations further reduce “where is my order” contacts and support time per delivery.
SmartRoutes also provides reporting on key metrics such as stops per route, distance per delivery, and failure rates, which gives operations teams the data they need to monitor Cost per Delivery and test whether process changes are actually improving it. Over time, this combination of route efficiency, higher success rates, and better visibility can significantly lower per‑delivery costs while maintaining a strong delivery experience.
Frequently Asked Questions about Cost per Delivery
1. How do you calculate Cost per Delivery in practice?
Start by adding up all last-mile delivery costs for a chosen period, including driver wages, fuel, vehicle costs, technology, and support. Then divide that total by the number of completed deliveries in the same period to get an average cost per delivery.
2. What is a good Cost per Delivery?
There is no single target that fits every business. Acceptable cost per delivery depends on your sector, order values, geography, and service level. The key is to track it over time and make sure it supports your margins and pricing rather than eroding them.
3. How do failed deliveries affect Cost per Delivery?
Failed deliveries are expensive because you pay for extra driver time, fuel, handling, and customer support without gaining extra revenue. Even a modest failure rate can push up your average cost per delivery significantly.
4. How can route optimization help reduce Cost per Delivery?
Optimized routes cut total distance, reduce time spent in traffic, and increase the number of stops drivers can complete per shift. This lowers fuel and labor costs per order and often improves on-time performance at the same time.
5. How does SmartRoutes help us monitor Cost per Delivery?
SmartRoutes reports on route lengths, stop counts, success rates, and time on route. You can combine these figures with your cost data to calculate Cost per Delivery and see whether changes in routes or processes are improving or worsening your delivery economics.
Related terms
Last Mile Delivery, Delivery Efficiency, First‑Attempt Delivery Rate, Failed Delivery, Route Optimization, Capacity Utilization, Delivery Time Window