When we started Trexity we wanted to offer fair and honest pricing for our deliveries. Other providers over-charged or added surge when things got busy. That wasn’t going to be us. Ever.
We decided on a time and distance model. A customer would only pay for the actual time and the actual distance the delivery would travel. From their store to their customer — nothing else. This would mean that hyper-local deliveries would be very cheap and longer, further deliveries would be more expensive.
Pricing was done in real-time, calculated right when the delivery address was added. If there were more than one deliveries going to the same area, we even calculated the distance between drop offs and only charged for the time and distance between them. It was a thing of beauty, efficiency and honest.
Unfortunately it was killing our business for one simple reason.
When a potential customer asked us how much it would cost to deliver a package, our answer was “it depends”.
“It depends”?!?! That is not an answer to the most important question in our line of work.
Our customers couldn’t budget when we answered “it depends”. Their customers couldn’t understand the cost of a delivery when it was completely dynamic.
The result was we stalled our growth. Merchants that were already with us, stayed because we could provide an “average” delivery cost (even writing this down makes me cringe — how could we not see this was an issue at the moment?).
Our pricing had become too complex and, even worse, against the norm of the how the industry operated. We tried to invent a new paradigm in an industry that would not adjust to it.
We knew we had to change to stop the stall. We had to make it easy to sell but, more importantly, easy for our customers to understand, budget and relay to their customers.
So we took all that dynamic pricing, all that underlying code, all that methodology and tossed it in the garbage and started over again with our customer in mind.
We moved to a simple flat rate pricing. Easy to explain. Easy to understand. Easy to budget for. Easy to sell.
The results were an unlock, and almost immediate. Our monthly volume became our weekly volume which then became our daily volume.
We got too complicated with our pricing. Too sophisticated for our industry. The moment you have to explain how your pricing works is the moment you’ve lost the customer. Over-thinking and over-engineering your pricing will stall your business. Start simple and then get complicated later.