Let's get right to the heart of having a business attitude when it comes to on demand delivery as an independent contractor. Should I reject orders? Should I accept all or most orders? How do I determine what I should take and what I shouldn’t?
Here’s the bottom line: It is your right. Sometimes it’s your responsibility. There are things that I really want to encourage you to consider but in the end it is your business decision.
Understand Your Rights as an Independent Contractor
In episode 2 of the Courier MBA Series, we talked about the importance of understanding what it is to be an independent contractor. This is critically important: You are the boss of your own company. You may not have planned to be, but you are.
Accepting and rejecting orders is a pretty central business decisions as independent contractor couriers. Don’t think like an employee here. You aren’t. Don’t go by what the platforms say you should do, or even by what I or any other drivers say work for them. YOU are the boss, you make your decisions. Just make sure you weigh everything when making those decisions.Page Break
Here are the things that you have to consider:
You have a right to set your own price
One of the most important rights a business owner has is to set your own prices. These companies CHOSE to make you a business owner when they CHOSE to not give you employment rights. And by default they CHOSE to give you the right to set your own price. That’s a critical right.
But we can’t set our price. The delivery fees are set and we have no control over them.
I’m here to tell you today that you CAN and SHOULD set your price. If you go back to episode 6 we talked about you digging deep to see what you really need to make, and being realistic about what you REALLY make. You always have to ask, is it enough? And you have the right and responsibility to make sure it is enough.
Setting your price through accepting and rejecting delivery offers
So what does this have to do with rejecting orders? Because you set your price through choosing whether an order meets YOUR price. Your price isn’t the delivery fee – it is the profitability. Go back to episode 8 – we dig into profit per hour. You set a goal here and that goal is your price. In episode 9 we talk about the 40 cent rule that says my time is worth 40 cents a minute. You can obviously set your own price but I find a lot of cases where 40 cents makes sense.
40 cents a minute IS your price. We talk earlier about evaluating deliveries – and here is how you set your price. You estimate how long the delivery will take, how much you will get paid, and divide pay by minutes. Is that total less than your price – for our example less than 40 cents a minute? You reject. If it’s more, you accept. That is how you set your price.
Claim your right to set your price
This is a right. Claim that right. Take everything into account here and realize it’s not greedy to set your price high enough to be able to stay in business. In fact it’s your responsibility. Remember that your earning power once you figure in all the things is in the ball park of 2/3 of your revenue. So if you’re making 40 cents a minute, $24 per hour, that’s more like a $16/hour job… that doesn’t seem so high or unreasonable, does it?
Set your price to a level that meets your financial and earnings goals. It’s your right as a business owner.
Can I be terminated for rejecting too many orders?
A real concern in the driver community is the fear of contract termination for low acceptance rates. I think a lot of that fear comes from an employee mindset. Never, never, never forget here, you are not an employee.
Companies cannot legally terminate you or take any punitive action against you for rejecting orders. A company cannot control when how or where you work as an independent contractor. It’s illegal.
Does it happen anyway? Possibly. Every once in awhile, I hear someone claim to be terminated for that reason. There’s a concern that companies are cracking down on cherry pickers. I find that if someone claims to be terminated for that reason, they were told verbally. You never see it being stated in writing, which makes sense because it’s illegal to terminate for that reason.Page Break
Should the possibility of termination be a determining factor for you?
I won’t dismiss the possibility, and you have to make your choices here. But here’s what you have to do: Dig deep into what you are really earning. Go to episode 8, figure out what you make as PROFIT per hour. This is so critically important that you do that, especially since taking every order usually entails a lot of miles. Is that enough? Do you make enough there to justify taking every order? If you do and you are concerned about termination, that’s your business decision and you are the boss.
Evaluate your earnings – termination may not be the worst thing that can happen.
If it’s not enough, is termination that bad? One thing to think about is that termination could weirdly put you in a good position – there are all sorts of employment lawyers out there who specialize in misclassification that would be chomping at the bit for a case like this. But you seriously have to consider whether moving to a different platform where you have freedom or even moving to a traditional job is a better bet for you – especially if you’re still thinking like an employee anyway.
Hold your ground folks. Don’t be intimidated by the fear of losing a job that you really don’t have, and remember your rights.
Are there benefits to accepting a higher percentage of offers?
Do the companies reward you for higher acceptance rates? There are promotions or rewards that they may offer to help you out.
Don’t rely on getting rewarded for taking bad offers. Most of the dispatching is automated. My experience and observation is that drivers who accept everything tend to get punished more often than rewarded – but remember that’s MY observation.Page Break
Some platforms offer incentives ofr high acceptance rates. Are these incentives worth while? Here are a couple of examples:
Grubhub uses their program levels as a major piece of encouraging higher acceptance rates. They have Premier and Pro levels that have ‘rewards’ for better ratings. The main reward is earlier access to scheduling. This may be a factor in markets where it’s harder to get scheduled blocks.
The other major incentive they push is an hourly minimum guarantee. The guarantee is only in place IF you have a high enough acceptance rate, and seems to average around $12 per hour.
The question to ask is, what is the trade off? Again, we have to go back to, are you TRULY making enough? Do the guarantees pay enough to make it worth giving up your right to set your price? Does having early access to scheduling really make that much difference? In my market, it really doesn’t, in others, it might. And that brings us back to the question of if it pays enough when all is said and done. And seriously folks, $12 per hour? Earning power on that is equal to a $6 to $8 per hour job – that's sub minimum wage people. You have to weigh all the options including other platforms that give you more freedom. In the end, you make the business decision here.Page Break
Bonuses for higher acceptance rates
Sometimes a bonus is tied to acceptance rate. Minimum amount per order, a per-delivery bonus, or a lump sum bonus when consecutive orders are accepted. I’ve had times where the incentive was high enough to make it worth doing, other times, not so much. Do the math, see what it would truly add to your PROFITS, and if it’s enough to meet your price, then it might be a good business decision.
But doesn’t rejecting orders hurt the customer?
Yes, customers can end up not getting food or having food late when orders aren’t being accepted. That doesn’t make it our fault for doing this. This is something that lays squarely on the shoulders of the delivery platform.
Remember, YOU ARE NOT AN EMPLOYEE.
That’s huge in this discussion. It is the responsibility of the employees of the COMPANY to make sure that orders are taken care of. YOU have no obligation until the moment you accept an order, and then it’s up to you to do your best. But the responsibility begins and ends with the individual order. Remember, this was a choice of the companies, not you. They absolved you of that responsibility when they chose not to make you an employee.
A customer’s right for timely delivery does NOT translate to you doing that delivery for free.
Companies can make a number of choices that help ensure better on time delivery
The bottom line is the company and THEIR employees are responsible for this kind of thing. They can do a number of things to improve the situation that doesn’t involve you driving for charity.
- Dispatch better. There is so much dead time with excessive drives to pick up when closer deliveries are available, or excessive wait time at restaurants. More efficient dispatching allows more deliveries to be completed with the same workforce.
- Make sure there is enough value in a delivery for a driver to reasonably compensate for delivery
- Hire actual employees, allowing the kind of control they need to really make sure deliveries are completed
Are other drivers hurt by having bad orders filter down to them?
Let me ask this question: Say you own a widget store. You charge enough for our widgets to cover your costs, pay your rent, and have something left to live on. Your competitor sells widgets for less than cost and they go out of business. How is that your fault? It’s the same thing here folks – you are not responsible for their bad business decisions.
Page BreakThis is all about business decisions, and about your right as a business owner to set your prices. The delivery companies are the ones who gave you that right when they refused to take care of you as an employee, and they CANNOT take those rights away. They cannot have it both ways.
Make Your Own Business Decisions Based on Your Needs and Goals
You have the right to set your price. You may be like a retailer who makes a decision that the MSRP is the best way to go, and if that makes sense to you, that’s your business decision. Or you can use the 40 cent rule, set your own price, and accept only the orders that meet your price. That’s your right. Page BreakThis may well be the longest episode in the series, but this is really important stuff. It’s about claiming your rights as a business owner, about setting your price, and making business decisions based on that price. This is a core right in what we do, so I felt it was worth the extra time.