Has the on demand delivery gig run its course? Can we earn enough still delivering for Grubhub, Postmates, UberEats, Doordash and others to make it worth it?
Grubhub's new pay model is reducing payouts per delivery, especially on batch orders, and eliminated the minimum base payout. Postmates improved pay twice to the tune of a 20% average reduction and also eliminating the minimum payout. At least with Doordash you can't go much lower than $1 per delivery.
Is it time to hang up the ol' delivery bags?
My time is worth a minimum of 40 cents per minuteThe 40 Cent Rule
I don't believe so. I believe you can still take control and thrive in this environment.
You got this!
I do believe that overcoming these reductions will mean being more selective than ever on the orders, and examining them on more than just final totals. Fair warning: If you are adamant about accepting all orders, this may not help you. However, if these reductions are dropping your pay, you might be ready to come to the dark side. But that's all I'll say about cherry picking, I already got on my soap box about that earlier.
Using the 40 Cent Rule to Find the Orders that Meet Your Goals.
“My time as a courier is worth at minimum 40 cents a minute”
That's the 40 Cent Rule. It's setting a goal – that I'm out to earn 40 cents a minute, or $24 per hour. When I'm out on deliveries, my decisions hinge on that rule.
Now maybe your rule is better off being the 50 cent rule. Maybe you will go lower – I started originally with a 30 cent rule and then bumped it up. Just don't go too low or sell yourself short.
Why Is the 40 Cent Rule Important?
The 40 Cent Rule focuses you on the bigger picture. It gets us away from stressing over a dollar amount but looks at how a delivery will help you meet a larger goal.
The 40 Cent Rule helps get past the frustration of an individual rule. Because you are focusing on the big picture, it's not that important if the delivery would have paid more under the old model or that the customer didn't tip so much. If the delivery earns us 40 cents a minute, that's the thing we're shooting for.
The 40 Cent Rule lets you take control. One of the most important rights of a business owner is one these companies try to take away from us: The right to set our own price. We cannot control the delivery fee structures, but we CAN control whether we accept the deliveries. The 40 Cent Rule is your way of setting your price.
An 8-Step Process to Apply the 40 Cent Rule to Accepting or Rejecting a Delivery Offer.
Step 1: Set Your Goal. Stick With It.
Create an hourly goal. If you need to, start with what your goal is for the week, and how many hours you want to use to achieve that. Now, bump that up. Give yourself room for taxes, for your vehicle expenses, and even to allow yourself some time off. And for gosh sake, quit accepting just the minimum, you deserve more.
Now break that down into a per-minute rate. Divide by 60. If you regularly have 10 minutes per hour of downtime between orders, maybe divide by 50. Then round your number in order to make the math easier ($25 per hour divided by 60 is 41.6667 cents per hour, the 40 is a lot easier to work with).
Step 2: Estimate What a Delivery Will Pay
This should take just a couple seconds. You already know with Grubhub, and even Doordash gives you a minimum. Gig Coach Jake has some great tips on evaluating what you could earn on Postmates and Doordash on his YouTube channel.
Even if your app doesn't tell you what the pay will be, you can make an educated guess. Or use the law of averages – for example my average pay on a Postmates delivery is going to be about $6.50 after tips. Yes, sometimes it's a lot lower and sometimes a lot more but it averages out.
Don't stress on the accuracy. You need to estimate this within a couple seconds. It's okay if you are wrong, you just want to be in the ballpark. The highs and lows work themselves out over time. Come up with a pay amount and stick with it.
Step 3: Estimate How Many Minutes the Delivery Will Take.
Pay close attention both to your offer screen and where the customer and restaurant are. I rarely deliver Uber Eats any more because they don't tell me where the customer is. Do a quick estimate on the drive time to both the restaurant and then to the customer. Figure in extra time for parking, waiting at the restaurant, etc. Google Assistant and Siri are great at giving quick answers to estimated drive time.
I tend to just estimate drive time and add 7 minutes which is my average for pickup and dropoff. Then if a restaurant is normally slower, or I'm in an area where parking will add to the time, I adjust.
Don't stress on this one either. It's okay to be wrong, because you are going to be wrong more often than not. That's okay. When you get a good grasp on our average times, those averages will work themselves out.
Step 4: Do the Math – What is the Per Minute Pay?
This part is simple. Payment divided by minutes.
It doesn't have to be exact. You can calculate that $7.87 divided by 23 minutes is 34.04 cents per minute, or you can do a quick look and say that's right about 35 cents a minute. Either one will work. And if you just aren't comfortable with math, you can always say “Okay Google” or “Hi Siri” and they can give you the number pretty quickly. However you figure it out, this is your estimated per minute pay.
Step 5: Decide!
What rule did you come up with in step one? The 40 cent rule? 50 cent?
Is the estimated per minute pay more or less than your rule?
If it's more, take it and go.
If it's signficantly less, just say no.
It's easy as that.
Now, if it's close, say you estimated 35 cents and you have the 40 cent rule. Use your gut. Do you feel like there's a good chance you'll be faster than you thought? Go for it. More often than not I go with it if it's close, especially if a lot of other deliveries have been above my target.
Step 6: Deliver it and See How You Did.
Track how you did. How many actual minutes did it take you? Did you estimate 23 and it was actually 30? Or you were quick and it was 18? Either way is fine. You just want to know how you did.
Take your actual pay that you received, now divide that by the actual number of minutes that the delivery involved. This is your actual per minute rate.
Take it a step further: I encourage you to track your deliveries. List total minutes, and total payout. Maybe even go so far as to list wait time so you can figure out averages. The better you know those averages teh better you can evaluate and estimate in the future.
Step 7: Evaluate.
How was your actual per minute rate compared to your estimate? Was it better? Or not so good? It's okay either way. When you are dealing with averages, there will always be better and there will always be worse. Don't stress (see a pattern here?).
Now, ask yourself: WHY was it better? WHY was it worse? Do you think any of these factors are things you could have reasonably predicted? Sometimes things happen you can't predict, but sometimes you realize “Oh, I should have thought of that.” Realizing this will help you with your future estimates.
Step 8: Repeat!
Now that you've done that first delivery, there's another order coming in. Repeat. And repeat again. Go make that money. Keep paying attention, evaluating, adjusting, and it doesn't take long until you are really good at this.
You'll remember those factors that you should have thought about last time and adjust. You'll look at how you are almost always overestimating the delivery time and so you'll shave a couple minutes off your next estimate (or vise versa). Learn, repeat, learn, repeat.
It seems like a lot but it only takes a few seconds to go through all these steps, with plenty of time to spare for deciding yes or no on any offer. Seriously folks, get real good at using the voice assistant on your smart phone. You'll get good at this pretty quick with practice.
I can't say this enough: Don't Stress. The goal isn't to be Carnac the Magnificent (I may have just dated myself). The goal is to be in the ballpark often enough that when all is said and done, you'll have met your goal.
The 40 cent rule isn't a be all end all. It may or maynot be a great fit for you. Over time, your experience, knowledge of your market, etc. will become more instinctive. If you ahve ideas or methods that work well for you, we'd love to hear about them in the comments below.