This illustrates how many of your shipments are hitting the Minimum Charge Amount (price floor) and its negative financial impact.
The parcel costs and parcel agreements are the concept of Minimum Charges. This is an area of carrier pricing strategies that prevents customers from taking full advantage of their discount in their agreement. The Minimum Charge represents a price floor that, regardless of whatever your discount percentage is on that service, your net charge for that package will never go below.
Take this as a simple example:
You have a package that costs a list rate of $10.
You have a 50% discount on that $10 package.
You would expect that your net rate for that package would be $5, but the carrier has a Minimum Charge for that service of $7.
You’re actually only realizing a 30% discount, and you’re paying $2 per package more than you would expect given that you have a 50% discount.
This is a particularly important metric to take into consideration when negotiating your carrier agreement because if you have lightweight packages that don’t travel very far, then you’ll hit the Minimum Charge more often. The carrier could offer you better percentage discounts on their services, but that won’t do anything to help you lower your costs because of that Minimum Charge. And one good thing to address this is the negotiation of the minimum reduction on the carrier agreement.
Reveel makes it easy for you to understand how much this impacts your business and shows you how you’re doing in managing this vital metric relative to your peers with this VitalFactors™.
Minimums graph: illustrates how many of your shipments are hitting the Minimum Charge Amount by Package count and by Net spend. It also shows the Unrealized savings on each impacted service.
Over time graph: shows your weekly % hitting minimums.