As you get the hang of delivering packages, and you continue to track your earnings and mileage, you will notice that your costs will continue to eat away at your final earnings. As an independent contractor, you are responsible for analyzing your cost structures and optimizing where you can.
One of the most significant and obvious expenditures that you will incur during deliveries is fuel cost. Assuming a 60 mile route for a 4-hour delivery block, and a moderately fuel efficient car at 20 MPG, you will be burning 3 gallons or so of fuel. At $3 per gallon, you will be paying about $9 in fuel costs during your 4 hour delivery block.
Firstly, make an effort to find the lowest cost gas station in the area as well as along common delivery routes. Depending on the brand and grade, you may be able to cut your fuel costs that can add up quickly over time. Although 10 cents per gallon may not seem like much, this will save you $1.50 for every 300 miles you drive. Look out for discounted gas station cards on places like eBay for additional savings.
Second, be aware of your fuel efficiency. While it may not be practical to purchase a new car that is more fuel efficient, other actions can be taken such as removing heavy items from your trunk that you do not need, and driving more slowly without abrupt accelerations and braking. Check your car’s tire pressure regularly – under-inflated tires can cause decreased fuel economy, and you can’t always trust your car’s TPMS system.
Insurance, repair and legal costs
It happens to the best of us – fender benders, speeding tickets and thinking we could get away with parking temporarily in a no-parking zone. Accidents and tickets do not happen frequently, so we do not think of these as costs in the short term. In the long run, however, these things do happen, and when they happen, the fines and repair costs can be very high. Insurance premiums will also often go up as a result of accidents and/or previous traffic infractions.
As an Amazon Flex driver, you will be racking up many miles, and what that means is that the likelihood of getting into an accident or getting a ticket also increases. This likelihood must also be considered into your cost structure, and minimized as much as possible.
What this means is that you should drive in a way that minimizes these risks as much as possible. Do not speed or violate other traffic rules such as stopping at stop signs and abiding by no parking signs. There may be times when you are running late for deliveries, but the possibility of receiving a ticket is not worth the cost of speeding; instead, you should focus on other ways to make sure you do not run late in the first place.
Also, minimize wear and tear on your car as much as possible by not accelerating and braking abruptly, and generally keeping your car in good condition.
No matter how carefully or fuel-efficiently we drive, vehicle deprecation will also be a cost that you may not notice in your everyday delivery routes, but most definitely adds up in the long run. One way to keep depreciation to a minimum is to use a vehicle of lower cost and one that is older, as these will have depreciation costs that are much lower than a new, expensive car.
Unlike rideshare services, the condition of the car will be less of an issue, so you will have more flexibility in determining the best vehicle. One thing to keep in mind, though, is that an older car will tend to have inferior gas mileage, so you will have to find the right balance.
In extreme cases, it may even make sense to rent a car rather than use your own. Three conditions would need to be met for this to be a cost-effective option:
- Rental car rates offered in the delivery area are low
- You have / will confirm and accept many delivery blocks during the rental time
- The rental car has good fuel efficiency
Driving has significant costs that can add up quickly and eat away at your earnings. Be conscious of your fuel costs & efficiency, as well as being a safe driver to avoid traffic fines and penalties. Also consider the flexibility you may potentially have in selecting the best vehicle to conduct your deliveries in a way that can keep depreciation costs to a minimum.