How Much Does It Cost To Run A Direct Store Delivery Business Monthly?
Direct Store Delivery Running Costs
Expect monthly running costs for Direct Store Delivery to start near $92,200 in fixed overhead (payroll and G&A) plus variable costs consuming 270% of revenue in 2026 This high fixed base means scaling volume is critical This guide breaks down the seven core operational expenses—from driver costs and vehicle leasing to platform maintenance and administrative payroll—that determine your cash flow
7 Operational Expenses to Run Direct Store Delivery
#
Operating Expense
Expense Category
Description
Min Monthly Amount
Max Monthly Amount
1
Core Payroll
Personnel
The 2026 payroll for 11 FTEs, including 5 drivers, 4 developers, and 2 executives, totals about $75,200 per month.
$75,200
$75,200
2
Fuel & Drivers
Variable Operations
These costs cover fuel, tolls, and variable driver compensation, representing 110% of revenue in Year 1.
$0
$0
3
Vehicle Fleet
Fixed Assets
Vehicle leasing and insurance account for 70% of revenue in 2026, dropping to 50% by 2030.
$0
$0
4
Hub Rent
Facilities
The monthly rent for the cross-docking hub is a fixed $6,000, essential for sorting and staging.
$6,000
$6,000
5
Tech Infra
Technology
Fixed platform maintenance is $2,500 monthly, plus 30% of revenue for variable cloud hosting in 2026.
$2,500
$2,500
6
CAC Budget
Sales & Marketing
The 2026 marketing budget is $150,000 ($12,500 monthly), targeting a $2,500 CAC per new customer.
$12,500
$12,500
7
G&A Overhead
G&A
General and administrative fixed costs, including office rent and legal fees, defintely total about $7,500 per month.
$7,500
$7,500
Total
All Operating Expenses
$103,700
$103,700
What is the total monthly running budget needed for the first 12 months?
The total monthly running budget for your Direct Store Delivery business starts with a fixed overhead of $92,200, but the real pressure point is the variable cost structure, which is pegged at 270% of projected revenue, a ratio that requires immediate pricing adjustments or operational overhaul; for context on earning potential, check out How Much Does The Owner Of Direct Store Delivery Business Typically Make?
Fixed Monthly Burn Rate
General and Administrative (G&A) costs total $17,000 per month.
Payroll expenses are substantial, clocking in at $75,200 monthly.
Total fixed overhead requires $92,200 just to keep the lights on.
This is your baseline requirement before selling a single delivery service.
Variable Cost Exposure
Variable costs are projected at 270% of revenue.
For every dollar earned, you spend $2.70 on direct costs.
This structure means profitability isn't possible without massive price increases.
You must aggressively optimize route density or renegotiate supplier agreements.
What are the biggest recurring cost categories and how do they scale?
The biggest recurring costs for your Direct Store Delivery operation are personnel, which account for 75% of fixed expenses, and fleet expenses, consuming about 18% of gross revenue. Defintely, controlling driver density and maximizing route efficiency are the primary levers for achieving positive unit economics.
Payroll Overheads
Driver and merchandising wages represent 75% of your total fixed overhead budget.
Hiring pace must match the expected order density per route segment.
If monthly fixed costs hit $45,000, payroll alone is roughly $33,750.
Driver training time directly impacts how fast you can scale service capacity.
Fleet and Tech Costs
Vehicle costs, including leasing and fuel, eat up 18% of gross revenue.
Route optimization software is essential to reduce fuel burn per delivery stop.
Platform maintenance scales based on the number of suppliers using tracking features.
Have You Considered How To Outline The Supply Chain And Logistics For Your Direct Store Delivery Business? shows how fleet strategy affects variable spend.
How much working capital or cash buffer is required to reach breakeven?
You need to secure enough runway to cover fixed operating expenses until the Direct Store Delivery model hits its cash flow target of $77,000, projected for August 2026; since this timeline is still distant, planning for 3 to 6 months of fixed cost coverage right now is essential for survival, Have You Considered How To Outline The Supply Chain And Logistics For Your Direct Store Delivery Business? You defintely need this safety net.
Target Cash Position
The minimum required cash buffer to sustain operations is $77,000.
This number represents the point where the Direct Store Delivery operation becomes cash-flow positive.
You must map out the exact monthly fixed burn rate leading to August 2026.
Don't just hit $77,000; aim to exit that month with $85,000 in the bank.
Fixed Cost Buffer Rule
Always hold cash covering 6 months of fixed overhead, not just 3.
If your current fixed spend is $14,000 per month, your safety buffer must be $84,000.
This buffer covers slow client onboarding or unexpected tech stack costs.
Treat this cash buffer as non-operational capital; don't spend it unless the runway drops below 4 months.
How will we cover fixed costs if revenue falls 30% below projections?
If revenue for your Direct Store Delivery operations drops 30% below the forecast, you must immediately activate cost controls focused on discretionary spending and hiring freezes to protect your existing runway.
Review travel and entertainment budgets for immediate cuts.
If your fixed overhead is $30,000 monthly, a 30% revenue drop requires finding $9,000 in cuts just to stay level.
Freeze Non-Essential Headcount
Delay hiring for roles not directly supporting current service delivery.
Focus current staff on maximizing route density and merchandising efficiency.
Examine operational structure to see if current tech can absorb planned volume.
If you’re planning expansion into a new metro area, pause that capital deployment; you can’t afford new fixed leases yet.
Personnel is usually your biggest fixed cost, so delaying hiring is critical. If you planned to bring on a new data analyst to build out premium reporting, push that role back six months or longer. You defintely need to maximize the utilization of your existing driver and merchandising teams first. Before adding headcount, look internally at process improvements; learning How Can You Start Your Direct Store Delivery Business Efficiently? might reveal immediate efficiency gains in route planning that save you money now without adding new salaries.
Key Takeaways
The Direct Store Delivery operation requires a substantial fixed monthly overhead starting near $92,200, driven primarily by payroll and general administration.
Variable expenses are extremely high, consuming 270% of revenue, which necessitates rapid volume scaling to cover operating costs.
To ensure stability, the business must achieve profitability by September 2026, requiring a minimum cash buffer of $77,000 before that date.
Payroll ($75,200 monthly) and vehicle-related expenses (which account for 70% of revenue in 2026) represent the largest recurring cost categories demanding strict management.
Running Cost 1
: Core Team Payroll
2026 Payroll Baseline
Your 2026 core team payroll for 11 FTEs is projected to hit approximately $75,200 per month. This figure represents a significant fixed cost underpinning both your technology development and physical delivery operations for the Direct Store Delivery service.
Staffing Calculation Inputs
This $75,200 monthly cost is fixed for 2026, based on 11 FTEs. You need finalized salary quotes for 5 drivers, 4 developers, and 2 executives, plus estimates for employer taxes and benefits (the burden rate). This payroll supports the tech platform and the physical delivery fleet. It's the base salary load.
5 Drivers for route execution.
4 Developers for platform maintenance.
2 Executives for strategy and G&A.
Managing Personnel Costs
Since this payroll is largely fixed, control comes from hiring cadence and role definition. Developers represent high fixed cost; ensure their output directly drives revenue or reduces other variable costs first. Drivers often mix fixed salary with performance incentives, so watch that mix. Don't hire ahead of validated demand, that's how cash burns fast.
Tie developer hires to revenue features.
Use contractors for short-term scaling.
Benchmark executive compensation now.
Fixed Cost Context
Payroll is fixed, but it operates alongside massive variable delivery costs. Fuel costs are projected at 110% of revenue in Year 1, which dwarfs payroll pressure initially. If revenue lags, covering $75.2k plus high delivery expenses becomes the immediate cash flow challenge you must plan for.
Running Cost 2
: Fuel and Driver Costs
Initial Cost Shock
Your variable driver and fuel costs start dangerously high, consuming 110% of revenue in Year 1. This is a major structural deficit you must fix fast. Honestly, this means you need immediate route density improvements just to cover the operational cost of moving product. That initial burn rate is unsustainable.
What Drives This Cost
This line item captures the direct cost of moving goods from supplier to shelf via Direct Store Delivery (DSD). You need precise tracking of fuel consumption per route mile, toll data, and the actual driver compensation structure. It’s the single biggest variable expense eating your margin right now, so granular tracking is key.
Fuel usage rates per vehicle mile.
Total monthly toll expenses incurred.
Variable driver compensation percentage.
Cutting Variable Burn
Getting this below 100% requires aggressive route density and utilization immediately. Focus on maximizing stops per mile traveled, which cuts wasted fuel and driver time. Also, review driver pay structure to defintely incentivize efficiency over simple hourly commitment. High churn here spikes replacement training costs.
Optimize routes using real-time sales data.
Negotiate bulk fuel purchasing contracts.
Ensure drivers hit 8+ stops per route segment.
Efficiency Timeline
The model assumes efficiency improves, pushing this cost ratio down over time. You must model exactly when you hit 100%—that’s your operational break-even point for driving activity. Compare this against the 70% vehicle leasing cost to see the full exposure of your variable operating spend.
Running Cost 3
: Vehicle Fleet Expenses
Fleet Cost vs Revenue
Vehicle leasing and insurance costs are set to consume 70% of revenue in 2026. This significant allocation drops to 50% by 2030 as you scale delivery density. You must aggressively manage asset utilization now, or fleet costs will crush your contribution margin.
Sizing Fleet Expenses
This cost covers the required commercial leasing payments and insurance premiums for your delivery trucks. To calculate this accurately, take the total number of vehicles times the monthly lease rate, plus the annualized insurance premium divided by twelve. This is a direct cost tied to your service capacity.
Total planned fleet size.
Monthly lease payment per unit.
Allocated annual insurance cost.
Controlling Leasing Costs
Since 70% of revenue is at stake, focus on maximizing asset uptime. Negotiate short-term lease options or mileage flexibility until route density stabilizes above 80% utilization. A major pitfall is paying for idle capacity; every hour a truck sits, it eats into the margin needed for payroll and tech costs.
Demand lower mileage caps upfront.
Bundle insurance with maintenance where possible.
Prioritize route density over fleet size expansion.
Impact on Profitability
If fleet costs remain at 70% of revenue, you have very little margin left to cover other major expenses. This leaves almost nothing for the $75,200 core payroll or the $150,000 marketing budget. Covering the fixed $6,000 hub rent, which defintely needs to be paid, becomes a serious cash flow issue.
Running Cost 4
: Logistics Hub Rent
Hub Rent Fixed Cost
This cross-docking hub rent is a critical fixed cost of $6,000 monthly. This space directly enables efficient product sorting and staging, which is essential for your Direct Store Delivery (DSD) model to function smoothly. It’s non-negotiable overhead supporting speed-to-market. Honestly, this is your operational anchor point.
Cost Structure Input
The $6,000 monthly hub rent covers the physical location needed for cross-docking operations. This fixed expense supports driver staging and product consolidation before routes launch. Compared to total core fixed overhead of about $85,200 (payroll, admin, tech base), this rent is roughly 7% of that base, making it a necessary but significant fixed charge.
Fixed monthly rate: $6,000.
Covers sorting and staging space.
Needed before generating delivery revenue.
Managing Fixed Space
Since this cost is fixed, optimization hinges on maximizing throughput within the existing footprint. If volume density increases, the cost per item sorted drops significantly. Avoid signing leases longer than 18 months initially to maintain flexibility as customer density changes across your service area.
Maximize utilization of space daily.
Negotiate favorable renewal terms early.
Ensure layout supports fast driver flow.
Break-Even Impact
Because hub rent is fixed at $6,000, it directly dictates your break-even volume calculation. Every dollar of revenue generated must first cover this cost before contributing to variable expenses like fuel or driver commissions. If you can’t efficiently use the space, this fixed charge will quickly erode your contribution margin.
Running Cost 5
: Technology Infrastructure
Tech Cost Scaling
Your tech stack has a 30% variable cost tied to revenue in 2026, plus a $2,500 fixed base. This structure means scaling revenue aggressively also scales your largest non-labor cost component instantly, demanding tight control over cloud consumption.
Infrastructure Budget Inputs
This cost covers core platform upkeep at $2,500 monthly and variable cloud usage tied to scale. If 2026 revenue hits $150,000, expect $45,000 just for hosting and data services. This is defintely a major lever impacting contribution margin before fixed overhead hits.
Fixed: $2,500 monthly platform maintenance.
Variable: 30% of total monthly revenue.
Input needed: Accurate revenue forecasting for 2026.
Managing Variable Spend
Since 30% scales with sales, efficiency beats trying to cut the fixed $2,500 base. Optimize data processing per route transaction immediately to lower the variable burn rate as you grow. Avoid vendor lock-in by ensuring architecture portability between providers.
Audit cloud usage quarterly for waste.
Negotiate volume discounts early in Year 1.
Tie data processing limits to service tiers.
Pricing Leverage
Because technology scales directly with delivery volume, your pricing must aggressively reflect this variable cost structure. If you cannot pass 30% of revenue to the client via service fees, your effective contribution margin shrinks fast, making growth unprofitable.
Running Cost 6
: Customer Acquisition (CAC)
CAC Target Check
Your 2026 acquisition plan allocates $150,000 annually, aiming to secure new customers at a high cost of $2,500 each. This budget supports acquiring only about 5 new clients monthly. You need volume fast to cover fixed overhead.
Budget Breakdown
This $12,500 monthly marketing spend funds lead generation efforts targeting suppliers and retailers for your DSD service. To justify the $2,500 CAC, your Lifetime Value (LTV) must be substantially higher. This budget covers digital ads, sales materials, and trade show presence. If you miss the target, costs explode.
Budget is $150,000 annually.
Monthly spend is fixed at $12,500.
Target volume is 60 customers per year.
Optimization Levers
A $2,500 CAC is steep for logistics unless contracts are massive. Focus on reducing the cost to acquire by optimizing channel spend now. Referral bonuses for existing retail partners can lower blended CAC significantly. Defintely track payback period closely.
Prioritize high-margin FMCG suppliers.
Test lower-cost digital channels first.
Reduce reliance on expensive trade shows.
Payback Velocity
If your average customer generates $1,500 in monthly contribution margin, you need 1.67 customers to pay back the $2,500 CAC. If payback takes longer than 6 months, cash flow tightens fast. Focus on steering marketing spend toward high-value suppliers immediately.
Running Cost 7
: Administrative Overhead
Fixed Overhead Baseline
Your General and Administrative (G&A) fixed costs, covering essential support functions, defintely total about $7,500 per month. This amount must be covered before scaling operational costs like fuel or driver compensation begin impacting contribution margin significantly. That’s your baseline overhead.
G&A Cost Components
This $7,500 monthly figure covers non-operational overhead necessary for compliance and structure. It includes office rent, general liability insurance premiums, and ongoing legal retainer fees for the logistics platform. You estimate these using annual quotes or signed leases, divided by twelve months.
Office Rent: Fixed monthly expense
Insurance: General and vehicle liability coverage
Legal Fees: Retainers for compliance work
Controlling Overhead Spend
Managing fixed G&A means controlling headcount and delaying non-essential, long-term commitments. For a growing DSD startup, avoid signing multi-year office leases now; use flexible co-working spaces until you reliably support 15+ FTEs. Standardize vendor agreements to lock in better rates.
Delay large office leases
Negotiate annual insurance terms
Standardize legal documentation
Overhead vs. Payroll Context
Compare this fixed $7,500 against your $75,200 monthly core team payroll. G&A is only about 10% of your primary personnel expense, which is quite lean for a tech-enabled logistics operation starting out. This ratio suggests good initial cost control on the administrative side.
