Pricing and Costs

Now that the payment is on hold, this is the moment to explain more about the pricing principle. In this section we illustrate the amount of money that will actually be released and to whom, after successful delivery.

We propose a platform that is run by the users themselves. Therefore all profits will go directly to the people who do the actual work, instead of getting stuck with an intermediate company. This means that the platform income is purposed to cover the three cost items of this platform: 1) Income for the restaurants for preparing the food, 2) income to the couriers for delivering the food, and 3) the costs of running the platform itself.

How did we decided what is fair distribution of the profits? Let’s have a look at how we calculated the delivery costs first, and how we adapt flexible pricing to ensure a fair payment depending on the situation.

Delivery Costs

The delivery costs paid by the consumer will be split into two items. First, the consumer has to pay a basic price for the delivery itself, and second, a price based for the distance to the restaurant. Based on this we propose that the consumer will pay a fixed price for short distances, for example €2 for rides up to 3.5 km). The reason for this is that also for short rides, the the courier still has to perform some basic actions, like picking up the meal in the restaurant and the delivery at the door of consumer, which take time.

For longer distances the consumer is also charged to pay an additional price, which is for example €1,- per kilometer. This is only fair since the courier has to bike a lot further which also takes time. By setting up the delivery costs into a fixed price plud an additional flexible price, we hope to encourage consumers to order from their local neighborhood restaurants instead of ordering meals from the other side of the city.

Restaurant Costs

As for the restaurant, they will cover the small flat fee that is payed per order to use the platform. No profit is made from this fee. So this fee will cover only the transaction costs and can be as low as €0,50 per order.

The restaurants will also pay an additional price for the couriers, since the couriers also need to be paid for the service they deliver the restaurants. They take the delivery of meals out of the hands of restaurants, which saves the restaurant a lot of time and effort. So it would be fair that they contribute to the salary of the courier as well.

However, the price the restaurants will pay will be a flat fee and no percentage. Whether the restaurant has an order of €10,- or €100,-, they will still pay the same fee. For the courier it doesn't matter how expensive the order will be, he still has to pick up the food, cycle the same distance and deliver the food. So there is no need to ask a percentage to the restaurants. Instead, the fee for the restaurants can for example be €3,- per order.