Pricing is a value orientation based on customer groups and market choices. There are many factors that affect the price and cost matching of cross-border logistics products. Generally speaking, “economic products are invincible at the cheapest, and high-priced products are invincible only at the fastest speed.” The escort agency charges different escort fees according to the distance, nature and value of the goods. The signed escort bill specifies these terms. The escort business is of course a combination of factors such as reputation, fame, and strength. Today, these still apply to logistics delivery, including what to transport, where to send, how heavy, how long it takes, whether there are discounts, whether there are special superpositions and other costs, etc. International logistics follows a set of mature trade terms (Trade Terms), that is, trade conditions, which determine the relevant costs, risks and responsibilities of the buyer and seller, as well as the obligations to be fulfilled during the delivery and receipt process. For example, FOB is designated by the buyer as the shipping company/shipping agent, and the ownership of the goods is transferred to the buyer after delivery at the port of shipment. Public quotations for standardized products are usually simple, but in terms of cost calculation for all links, it is more complicated for express delivery companies with full-process and full-network services. The calculation of single ticket price and internal processing fees, and the fair allocation of operating costs such as labor wages, transportation costs, site rental, fuel, and asset impairment must all rely on powerful systems and basic databases. Franchise or resource integration companies have segmented operation chains, and calculations in this regard are simple.
In the segmentation of the express delivery industry, Courier, Express, Parcel and Post are all different. Those positioned as “fast” include same-day delivery, next-day delivery, next-day delivery or express delivery, which are almost full-process follow-up services, maintaining service quality regardless of cost, ensuring that the delivery is collected and dispatched as planned, and the flight is scheduled. For example, FedExMBG promises to deliver the package according to the selected service time, otherwise the corresponding freight will be refunded (MoneyBack Guarantee). For customers, more service levels can truly enjoy diversified and differentiated choices in terms of timeliness. Benchmarking FedEx’s domestic product gradient, UPS provides 7 levels of service from fast to slow, from the fastest UPS NextDayAirEarly? The next morning to UPS Ground, the pricing gradient is 82%, 72.7%, 52.1%, 45.3%, 32.4% and 13.9% respectively. If the positioning is “more”, it is a hard job to increase the volume by price and to charge the price by volume. If they are not the main force in the market, then reducing costs is their only way out. If you can’t control the cost, don’t talk about economic products, and increase the volume without increasing revenue. Different modes of transportation correspond to different cost structures. The scale cost advantage of domestic land transport is stronger than that of air transport. For example, more than 70% of UPS’s domestic items in recent years have been delivered by land transport. Reducing labor costs is the top priority of its internal operating costs. By optimizing internal processes, increasing investment in online equipment, and improving production capacity through man-machine integration, the marginal cost allocated to each item will be reduced.
Product pricing is directly related to operating costs. Quotations should be rigorously calculated in combination with the market and operations. Once made public, they should not be changed frequently to prevent unpredictable situations. Usually, operating costs are calculated by weight segment, among which C total freight price = (A first weight freight + B reading π·X unit price) + Y surcharge is a more common pricing formula. In addition to freight, repeated delivery, remote areas, insurance premiums, customs taxes and fees such as bill payment, commodity inspection/inspection fees, fumigation fees, as well as warehouse overdue storage fees and additional packaging fees are generally listed separately. The pricing of documents, parcels and large items is usually different, especially in terms of first weight and additional services. FedEx SameDayFreight is $235 per ticket for no more than 25 pounds, while same-day delivery of parcels under 50 pounds within 10 miles in the same city is only $19. Special collection and delivery and door-to-door delivery are charged separately; if it is delivered on weekends and public holidays, the price of LTL freight service is almost as high as chartering. Most logistics status notification services are free, but delivery confirmation is very different from proof of delivery. If personal receipt and signature/electronic signature are required, overseas delivery companies usually charge a POD signature fee for each ticket.
Carriers and channel providers are important factors in pricing changes. For example, the price of express delivery in the United States is relatively expensive, but it has become a routine for major express delivery companies to increase freight rates at the beginning of each year, and to increase surcharges for non-standard operations and peak season delivery to offset the increase in fuel, labor and inflation costs. In the past five years, the average annual increase in the published prices of FedEx and others has been about 3% to 5%. For example, in 2017, the price of USPS standard mail increased by 3.3%, and the price of priority mail increased by 3.9%; in 2018, DHL rates increased by 4.9%, and UPS increased by the same proportion, and also increased some surcharges, with residential address delivery fees increasing by $0.2; in 2019, FedEx international and land freight rates increased by 4.9%, and domestic air freight rates increased by 5.9%. At the same time as the rate increase, large-scale home delivery fees, bubble coefficients, surcharges, etc. were also increased simultaneously. Individual customers have no choice but to accept this price increase, and large contracted customers are slightly less affected due to their high discount rates. In marketing, when facing merchants, peers or order channels of different sizes, there are discount prices, promotional prices, and VIP prices. It is rare to charge by piece. There is a flat rate cubic service for parcel delivery in the United States. As long as it can be packed into the packaging specified by the carrier, there is one freight rate, not based on weight (≤70 pounds) or distance. With homogeneous services, orders can only be accepted at low prices, but low prices do not bring customer loyalty, so the low-price strategy must also be based on stable quality.