Progressive Logistics Launches New Shipping Program

[rogercbryan]

I started Progressive Logistics Last April as an International and Domestic vehicle shipping company. We primarily work with auto auction buyers as well as a few government agencies. Business was OK in 2008 with a little under $100,000 in sale and a 22% profit margin. I've always wanted to take this bigger but lacked the correct software/system to make it work.

Here is our current procedure:

A potential customer fills out a form: Domestic Vehicle Shipping Service

We get an email
We contact a shipper (sub-contractor)
We get a price
We call the customer with the price
They approve
We send them an electronic invoice
They Pay
We ship

Very straight forward... but also time consuming. Customers want answers right away. They do not want to wait. So I figured there has to be some type of formula that will allow me to give instant quotes like the big companies do.

So I asked a biddy of mine who did his undergrad in engineering and is about to start Law School at GW. We developed a huge excel spread sheet mapping our contractors costs to the 50 main cities in the US vs. the mileage to travel between. We then developed an algorithm that balances these metric with the current national average price of diesel.

Here is what we came up with

P = (($275 +(M * $0.53) if M>275)) if Dp<$3.00
or
(if M<275 then P= $275)if Dp<$3.00

P=Price
M=Mileage
Dp=National Average Price for a gallon of diesel fuel

With this new equation my new process is

While bidding on a car at auction the customer will see a button next to the car that has calculated the shipping costs based on the above formula in relation to the mileage between the zip code of the auction that they are bidding at and their home zip code. When the buyer clicks the button they are take to a pay now screen where they enter their CC... and boom they are done... we start the shipping process.

It took me a year to get to this point!!! I should have done this a lot sooner.

What do you all think? Does this make sense?

[GriZzly]

Yes it does, the reality however is that when working with averages your margin will drop significantly on some orders, but this should be balanced by the number of times it increases on other orders.

On average you will maintain a consistant margin.