My wife and I just made an offer on some property that we may build on in the future. It’s crazy how involved things are with getting the terms together, offering, counter offering, all of that.
Fortunately the offer process is a bit simpler when it comes to deliveries. The delivery platform offers a job with details. You say yes or no. It’s simple as that.
This is so different than being an employee. The boss says do this or do that, and if you want to keep your job, you do this or do that.
But as contractors, we’re offered a task or a job and we get to decide.
And here’s the key: you DO get to decide.
Setting your price.
The main argument that I hear from people if you stress that we’re running a business is “but you have no control over the price.”
I will tell you that you absolutely can set your price.
You set your price through accepting and rejecting offers. You set your price, and if the offer meets your price, you accept it. If it doesn’t, you reject it.
Understanding your agreement with these delivery companies.
Here’s where it’s very important to understand the distinction between doing this as an employee and doing it as a business owner:
As a business owner, your contract is on a delivery by delivery basis.
You did not sign a contract to accept everything. In fact you didn’t sign a contract that says you would accept a certain percentage.
And in fact, if these companies try to force you to accept ANY percentage of orders, they violate the distinction between using employees and contractors. A company is not allowed to control the manner of your work including how many offers you take. That distinction is part of that fine balance they have to walk between hiring employees or being able to use contractors.
Your obligation under your contract begins the moment you accept a delivery and it ends the moment you complete the delivery. You make an agreement to get the food to the customer in the best condition possible.
Once you accept a delivery offer, you enter into a min-contract with the delivery company that involves that delivery and that delivery only.
It’s incredibly important that you understand this. You have no obligation to accept any offers. You can reject all the offers you want.
There’s a trade off. These companies owe you nothing. They are not obligated to give you offers and they are not required to guarantee any amounts at all.
That’s what you agreed to. A lot of it seems in their favor, but when you understand your rights, it also gives you a lot of power.
But what about Top Dasher or Grubhub Premier?
Doordash offers Top Dasher status in some markets. You have to accept 70% of your delivery offers to qualify. Grubhub has some incentives that go with Premier status, when you accept 95% of your offers.
Aren’t they requiring you to accept offers here? Isn’t that a violation?
Companies can attach a requirement to this to an incentive. They can say that we’ll give you this much extra IF you do these extra things. The line between whether this is allowable is in if you’re able to pass or opt out of those incentives.
The concept itself isn’t wrong. However, if it’s impossible to get orders without being in one of those programs, my interpretation is that they’ve crossed the line.
How do you decide whether to accept any of those incentives?
The question becomes, at what point does the benefit of the programs surpass the cost?
If you’re making $10 less per hour because you’re taking everything, is the benefit they are offering you worth that?
My thinking is, if I’m in a market where I have to be Top Dasher to be able to deliver at the times I want to deliver, I’m looking at other alternatives. If I take every delivery on any of these platforms, I know I can make more on other platforms that give me more freedom.
However, in the end, you still have to make your decisions. There are some places where you can do okay even if you take most your offers. There are times I know I can still make a decent amount of money on Grubhub by taking everything. I just know I can make more by making my own choices.
How do you decide what deliveries to take and what not to take?
Ultimately you have to figure out a system that works for you.
Last week’s podcast episode was all about accepting and rejecting offers. I went into a lot more detail about it there.
There are a lot of ways you could look at it:
If it doesn’t look like enough, just say no.
After awhile you get a pretty good feel for what works and what doesn’t. You know the low priced offers aren’t going to work. You know certain restaurants will be too slow. Then you take a quick look at where you’re going and what you’re getting paid and say yes or no.
Minimum dollar amount
Some will say, it has to pay $8 or more for me to take it. Or $10 or whatever.
In most situations you can make more doing this than just taking everything. This is the approach that many will call “cherry picking.” Just sit back and wait for the better paying offers.
Dollars per mile.
A popular approach on Doordash is to say it has to pay a dollar per mile or better. Doordash and Uber Eats both will tell you total miles your delivery will go. On other platforms you have to do a quick calculation in your head.
This is a good way to weed out some really low paying offers. Usually if you’re driving more than a mile for each dollar you earn, you’re not making enough money.
If you want a single factor to evaluate a delivery on, I would recommend paying more attention to how quick it can be compared to how much it will pay.
Several fast deliveries will almost always add up to more than one low but high paying delivery in the same amount of time.
Uber Eats only recently started including the expected tip in their offer amounts. Prior to that it was impossible to know what the delivery would pay. I used to call it the reverse cherry picking method – that the lower the pay amount on Uber Eats, the quicker the delivery and the more likely I would accept it. It worked quite well for me.
The 50 cent rule.
You can set your own price here. But this is the rule for me:
The delivery has to pay 50 cents a minute or better for me to accept it.
That’s $30 per hour. If you want to shoot for $24 per hour, go for a 40 cent rule.
It takes a little more thought. It’s not as quick and easy as a gut decision or a simple dollar per mile rule. But it also weeds out some of the crappy offers that these other methods still allow. It also opens the door to finding what seem like the lower paying offers that fit in with what you do.
Under this rule, I pass on some $20 or higher offers. And I’ll take some $5 offers. That $20 offer could be getting me $15 per hour while that 10 minute $5 offer is making $30 per hour.
How to make the __ cent rule work:
A lot of people will tell you this takes too much work. It’s too stressful. It takes too much time, too much thinking.
I’ve done this for two years. It started at 30 cents way back in the day. It’s not that hard really.
Decide how much time you need.
Look at the offer and figure out how quickly you have to get it done for it to meet your price.
It starts with how much money is being offered. Then divide by your price.
Let’s say an offer is $10.
Are you shooting for 50 cents a minute? $10 divided by .50 is 20. You have to be done in 20 minutes.
A 40 cent rule means you have to be done in 25 minutes.
A 30 cent rule means you have to be done in 33 minutes.
Isn’t that a lot of math?
It is, but there are short cuts.
I love the 50 cent rule because it’s really easy. Double the price and that’s your minutes. $10 = 20 minutes. $6.50 = 13 minutes.
Divide your price by 4, then take that by 10 get your 40 cent rule. A fourth of a $6 offer is $1.50 – or 15 minutes. Or divide by 3 and take that by 10 to get your 30 cent rule. A $9 offer has to be done in 30 minutes.
The 50 cent version is simpler – doubling is easy on most numbers. If $30 is too high, maybe you might adopt the 50 cent rule anyway but give yourself some more wiggle room.
Now simply ask, can I get this done that quick?
You figured out your $10 delivery has to be done in 20 minutes. Can you do it that quick?
Look at how far you have to go. How long will that take? How long will you have to wait at the restaurant? After awhile you can get a pretty good idea.
A lot of times I’ll figure about three minutes per mile, then add about 8 minutes for pickup and drop off. I’ll add more if the restaurant is normally slow, and for restaurants that it’s always easy parkup and easy pickup, I’ll figure less.
If you are on Uber Eats they give an estimate of how much time it will take. In my market it’s pretty rare for them to be off by more than a few minutes.
Doordash shows a “Delivery by” time on their offer screen. My experience in my market is that I’m usually dropping off very close to that time.
Some folks have different experiences. Pay attention to those things on your deliveries. How accurate is it? Are you usually several minutes ahead of the estimate? Is it often slower?
You can use these ideas and add them to your own experience to get a quick idea how long a delivery will take.
Then just decide.
I don’t find this stressful. Mainly because I look, I do a quick analysis, and then I decide. At that point I move on.
You will be wrong on the time it will take. That’s okay. Sometimes it will take a lot longer than you thought. Other times it will get done quicker. The better you get at this, the more it averages out.
Here’s my opinion on a delivery offer: Once I made a decision, the whole price part of it all is done. I don’t care how much of it was a tip. I don’t even care if I evaluated it incorrectly. It’s done. I made my decision and now it’s time to execute.
The main thing here is: Develop a system that works for you.
You may come up with a method totally different than anyone thinks of.
The main thing is, set your standards for what your price should be and how you determine if an offer meets your price.
Then execute. Evaluate, see if that’s working, adjust when you need, evaluate more.
Rinse and repeat.