Last Mile
RapidShift is modeling what a residential last-mile entry would look like in one pilot city. The team estimates 800 deliveries per day at an average revenue of $12 per delivery. Variable costs are estimated at $9 per delivery and fixed costs for the pilot would run $40,000 per month. Assume 25 operating days per month. Is the pilot profitable on a monthly basis, and what is the breakeven number of daily deliveries?
Case Exhibit
Rounding is standard practice in case interviews and almost always permitted with a quick ask.
Step 1: Calculate monthly revenue
800 deliveries per day x 25 days = 20,000 deliveries per month. 20,000 x $12 = $240,000 monthly revenue
Step 2: Calculate monthly variable costs
20,000 deliveries x $9 = $180,000 monthly variable costs
Step 3: Calculate monthly contribution and profit
Contribution: $240,000 - $180,000 = $60,000. Less fixed costs: $60,000 - $40,000 = $20,000 monthly profit
The pilot is profitable at 800 deliveries per day.
Step 4: Calculate breakeven daily deliveries
Contribution margin per delivery: $12 - $9 = $3. Monthly fixed costs: $40,000. Breakeven deliveries per month: $40,000 / $3 = 13,333 deliveries per month. Breakeven per day: 13,333 / 25 = 533 deliveries per day
Rounded: ~535 deliveries per day to break even.
Step 5: Contextualize
At 800 deliveries per day the pilot runs at a 50% cushion above breakeven, which is a reasonable buffer. However the $3 contribution margin per delivery is thin. Any increase in variable costs, such as fuel prices, failed delivery rates, or driver wages, could erode profitability quickly. This reinforces the earlier observation that residential last-mile is a volume and density game, and unit economics need to be stress-tested carefully before committing to a broader rollout.
