Who hasn’t had those late-night food cravings? 

Well, I believe once in a while all of us have. And with food being delivered to the doorstep at the wee hours, these cravings have found a new source to fuel themselves. With the giants like Zomato, Grubhub, Seamless, etc. the food business has transformed into a face like never before. And leading the game is Palo Alto-based food delivery app DoorDash. 

With exponential growth, the organization is offering great services and even larger employment alternatives. Digital advancements owe a lot to the digital boom and businesses these days have embraced online technology well.

Considering the stats, DoorDash has established itself as the largest food delivery service in the United States amid the pandemic crisis. Surely, the food delivery company has brighter prospects in the future and may surprise us with better stats and technology involvements. 

If you too want to develop a food delivery app like DoorDash model then you are reading the right piece!

DoorDash Business Model:  Where It All Began and Where Are We Today?

Understanding DoorDash: The Beginning

The idea of the Doordash app was conceived in 2012 October as Palo Alto Delivery delivering almost everything in the Bay Area, and the first delivery was made in January 2013.  As the app grew immensely and attracted a lot of investors, in June it was established as DoorDash. Its founders did the initial market research and database building on their own. 

In the present time, it is over a $13 billion worth company and has some of the big names like Y Combinator, Charles River Ventures, Khosla Ventures, Sequoia Capital, and others backing it for its growth. 

DoorDash Business: The Expansion Story

DoorDash marketing strategy has been exceptional and has helped it earn great results over time. We share here DoorDash growth 2020 highlights that would help you understand DoorDash business model and strategy closely.   

  • Y Combinator was the first funding company that invested an amount of $120,000 in DoorDash. Since then, there is no looking back for the company. 
  • The year 2014 brought significant expansion in the organization’s timeline as it expanded its services with DoorDash LA in June 2014 and DoorDash Boston in September 2014. It included cyclists in its workforce for delivery. 
  • A year later in November 2015, the organization expanded its services to Toronto (Canada). 
  • Another milestone in the timeline of the app’s journey is when it began alcohol delivery services in Southern California, partnering with another biggie Ausher-Busch.
  • In the short span of just 3 years, DoorDash held a strong market in around 250 cities by December 2016. To help the businesses deliver outside its marketplace, DoorDash came up with DoorDash Drive program. 
  • In 2017, DoorDash partnered with Starship Technologies bringing an evolution in the food delivery industry with Delivery Bots. This was a significant move in the industry. 
  • The same year in April, DoorDash partnered with electric bike company GenZe and offered bikes to the delivery team in Washington D.C., Los Angeles, San Francisco, and Vancouver. 
  • Later in 2017, the team acquired a fellow Y-Combination company, Rickshaw that shared a similar vision with DoorDash in last-mile delivery. 
  • The same year, DoorDash also introduced group food delivery alternatives for iOS users. 
    In April 2018, the app further partnered with Walmart and moved to the grocery delivery domain
  • In March 2019, DoorDash claimed its rule over the food delivery market in the US beating Grubhub with a percentage of 27.6% of the on-demand delivery market under its name. 
  • The same year in August DoorDash announced acquiring Caviar. Later the same month it announced acquiring Scotty Labs and partnering with Mercato. 
  • DoorDash announced opening its first ghost kitchen in October 2019.
  • DoorDash net worth 2020 is around $13 billion making it the largest third-party delivery service in the USA serving over 4000 cities with around 340,000 stores in America and Canada. 

The DoorDash growth strategy continues to grow stronger and better with each step. They have shown relentless efforts to bring in the market that not only helps them earn profits but also provides its user with a never-before experience.  

doordash journey

 

DoorDash Revenue Model: How Do They Earn?

When talking about the DoorDash revenue model one would find how the founders have monetized customers’ needs and helped everyone a part of the business to grow. DoorDash does not work on the pocket filling model, instead, they focus on experimenting and bringing in the market something that would make things easier for their customers. With a customer-centric business model, DoorDash has managed to be the best in the business in a short span of less than a decade.

Let’s have a look at the DoorDash pricing model and how the giant earns enough to fund its employees and dashers taking care of future acquisitions and plans.

doordash business model

The company earns majorly from these four sources:

  • Commission
  • Advertising
  • DashPass
  • Delivery Charges 

Commission from the Restaurants  

Any business that is listed on the DoorDash app needs to pay the app a percentage for each order placed. DoorDash charges these restaurants for collaborating with them and for the delivery program. The DoorDash service fee may sum to around 20% of each order. 

The percentage may be a little higher, but restaurants are fine with it as with this little investment they can reach a wider audience base and have a delivery system at their disposal. 

Advertising on the App

Monetizing on your customer loyalty and helping others to grow is a great idea!
Since the app is quite popular in its respective marketplace, a lot of other businesses take advantage of this and showcase their business on the app. Restaurant owners can make use of the app to promote their business. They can inform the customers about the special discounts and offers they have. 

DashPass

Thinking what is DashPass?
DoorDash offers its customers a DashPass which is a subscription model that helps them save on delivery charges and service fees. It costs users $9.99 every month, and according to DoorDash, one can save around $4-$5 on each order. Customers with the pass do not need to pay for the delivery service over $12.  Thus, with the DashPass one can cut down on DoorDash service fee and delivery fee.

Delivery Charges

When it comes to the DoorDash delivery fee, the charges are quite minimal. The delivery fee may range from $5 to $8 and the service fee depends on the order subtotal. These DoorDash fees are to compensate for packaging, marketing, doordash app development costs

We would now discuss the DoorDash pricing model here and see what customer pays for and how it works. 

 

DoorDash Pricing Model: What Customer Pays for and How It Works 

When we talk about the pricing of a product or a service it depends on various factors like the benefits you get, cost of development, taxation, transportation, etc. The same goes for DoorDash. What DoorDash customers pay for depends on a lot of factors that are subjected to change. Still, they follow a general path that each payment process follows. Let’s have look at various factors that determine the DoorDash pay model.

DoorDash Pricing Model

A DoorDash order cost is determined by various factors like:   

  • The cost of food items inclusive all taxes on the menu of different restaurants
  • The dashers’ delivery fee for the particular order
  • The additional service fee that is charged by the restaurant
  • The extra tip to the dasher along with service fee and delivery fee  
  • The extra charge of $2 for any small order of value less than $10. 

These are the major factors that determine the final subtotal DoorDash prices. The charges here could vary depending on various components that are directly or indirectly involved. 

Here’s a brief of the factors that affect the cost and how they matter. 

Restaurant

The restaurant food prices are the major factor that determines the DoorDash cost. Some restaurants may be expensive and others may be cheap. 
So, be smart. Choose the right restaurant and SAVE!

Distance 

With DoorDash extending its services beyond the marketplace with the DoorDash Drive program, they would be charging a little more than.  If the delivery is beyond a limited distance you would have to pay a little for the extra mile. 

Demand

When talking about how much does DoorDash cost, it would be dependent on the demand for the services too. There are days when the demands are quite high and so are the prices. 
The service fee for the times when there is a higher demand is applicable!

Lessons Learnt from the Food Giant!

With a well-managed and extensive revenue and pricing model, DoorDash has followed its objectives of making profits very clear. They have made it very transparent that each aspect of the business gains and enjoys the service. 
If you are looking forward to entering the market with an app like DoorDash, and aren’t sure how much DoorDash costs don’t panic. 
The cost of development would be affordable and worth it!

 

What Does DoorDash Cost?

The average cost of DoorDash like app development would be dependent on various factors like the features you integrate, the location of the mobile app development company, the experience of the team, aesthetics, app platform, type, etc. 
Considering all these factors the app would cost you around $25000 to $100,000. 

Related Blog: Key Features and Cost of Developing Food Delivery Apps like Doordash

Finding the right tech partner who could help you expand your business and make a technically sound and scalable app is crucial. 
A little background check of the agency you have hired for your work would be great!
 
Before investing, two things that you need to take care of are DoorDash Business Model and DoorDash Feature List. 

Food delivery app consultation

 

How Is DoorDash Business Model Different Than Others in the Market? 

When talking about the business model of DoorDash, it is important to look for the features that make it better than the rest. The DoorDash revenue 2020 clearly speaks of its success and business model and its working strategies.

A lot of food delivery apps have surfaced in the past decade but none have a growth graph as DoorDash has. 

Let’s first explore what makes the app different than others in the market. 

A business marks its presence in the market with the exemplary features it has to offer. You can work on the quality and the solution that you have to offer to your clients. When talking about how do DoorDash orders work it is quite a simple and comprehensive process thus making it easier for the customers and restaurant owners to connect. 

 

How Do DoorDash Orders Work?

Ordering food via DoorDash is a simple process. You need not wait long to satisfy those midnight food cravings. 

Choose What to Order

Log in to the app, scroll the home page that lists all the restaurants in your locality, choose a dish, and add to cart. 
You can even choose by meal type. Thus, you would not have to invest a lot of time in finding the right restaurant or checking if the restaurant you want to order from is nearby. 

Make Payment

Chose a dish? Now, just make payment and woosh… you’re done. 
You can add your card or choose COD or any other alternative that you want to use. Sounds simple!
A click and your food would be on the way. 

Track Your Order

You can simply track your order step by step. When the order is accepted, prepared, and out for delivery. 
This app is most beneficial for the customer where they can see how long would it take for the dasher to deliver the order. 

Enjoy and Review 

As the food is delivered, enjoy and share a review. DoorDash delivery fee would be included in your order value so all you need to do is collect your order and start hogging.

Must Read: Why Octal is the best company for Food Delivery App Development

DoorDash has been in the market for less than a decade and it has revolutionized the food delivery industry like no other organization. Its marketing strategy is one of a kind that helps it win loyal customers and employees. 

Let’s have a look at some of the amazing tactics that the app uses. 

 

DoorDash Marketing Strategy in Brief

1. Each segment enjoys specific benefits with each order. 
No order is only beneficial to the customer or just the restaurant owner. Each order looks for a positive result for both the parties thus helping them be loyal to the app. 

2. Dashers in Style 
DoorDash has its riders called the Dashers. Giving their riders an identity not only makes the job look a little cool but they do feel a part of the community and thus enjoy working with the team. 

3. Minimal Delivery Fee 
The app offers minimal delivery fees thus making it easier for the customers to enjoy their mail at minimal prices. The best thing is these prices do not affect the dashers they get their part of the payment. 

4. Commissions  
When talking about how much does a DoorDash charges restaurant, it is around 20%. This is the major source from where the company earns its profits. Maybe the amount sounds a little high, but the brand brings a bigger business than the amount charged. 
Restaurants gain a lot and thus enjoy all the details that are to be worked on. 

5. Dashers Enjoy the Payout 
The dashers earn around $600 per year. The amount may not sound a lot but is decent enough to enjoy a decent lifestyle. Rest with tips and all the service may rise. 

6. Owns a Great Territory
When talking about DoorDash, the app is operational in around 4000 cities and has over 340,000 stores in the USA and Canada. It is by far the largest third-party delivering service in the area. Grubhub is its largest competition, but with super cool experiments and great customer service, it took them just 6 years to be on the top of their game. 

Food App expert consultation

Seriously!
Imagine small robos bringing you your food or the electric bikes that save fuel. Not just this, cyclists as dashers. If we study the business model DoorDash has to offer, we surely can make no mistake in concluding that they have the best services to offer. 

Let’s now talk about some of the Features that set DoorDash aside from its competition. 

 

DoorDash Feature Set

When talking about the DoorDash feature set, it is quite an extensive topic. We’ll surely cover it in our next blog. For now, let’s just have a look at some of the features that you must include in your app like DoorDash. These are the features that set DoorDash out from the crowd. 

1. Suggestion List
With predictive analytics in action, the app offers you a suggestion list depending on your previous orders and location. This would save the time of your customers, thus making you a popular choice. 

2. Top Menu
You can always enjoy the best food from the top restaurants without surfing a lot. Based on the data, you can show the top ordered dish of the day or the most popular dish, thus reaching out and convincing more people to place the order. 

3. Dual Rating 
You restaurant and your dasher must both be rated well. So, just make it a point that your customer gets to review the restaurant and the rider. In case of any inconvenience be available on the go and help your customers with some rewards, discounts, or compensations. 

4. Live Tracking 
As already said, the whereabouts of your customers’ order is quite important. Let your customers know the exact time of your order delivery and how it can be worked on. Waiting and tracking are important components and see how they can proceed. 

5. Schedule Delivery
Want to get some cakes delivered for the birthday? Schedule an order delivery for the party and shake off the stress to deliver the food at the right time. Simple!

These are some exemplary features that DoorDash offers to its customers. Other than these they do offer general features that any other food delivery app would offer. 

Key Takeaway! 

So, this is all about the revenue model and DoorDash pricing model that you need to know. If you want to get an app developed, reach to hire mobile app developers at Octal IT Solution. With our experience and expertise, we would help you stand your ground and enjoy rewards. 

DoorDash has been dedicated to providing services that are interesting and innovative. They have been experimenting and expanding their business since the start and have attracted great funding. With a self-sustaining model, they have reached the top. 

FAQ on Doordash Pricing Model and How It Works

Entering the market with a food delivery app like Doordash is a tough nut to crack. You would compete with some of the dominant names of the industry. Before you decide to hire mobile app development service providers, here are a few things that you may need to know. 

How does Doordash pricing model help make money? 

Doordash makes money with various service fees and other charges. They have a great turn-over and it all comes from the restaurants, customers and even dashers. Thus, with a well-structured revenue model, the organization ensures that everyone is in a win-win situation. 

Does the tip directly go to the dashers? 

Well, for Doordash the tip is added to the dashers account directly and is encashed when the salary is paid. You can either let the dashers track their tip or directly add it to their accounts and pay them when the settlement is done. 

Who takes the Doordash delivery fee, the organization, or the Doordash drivers?

The delivery fee for Doordash goes directly to the organization. Dashers get paid according to their trips and tips. They have nothing to do with Doordash delivery prices.

Does Doordash work like other food delivery apps or they have a different business model? 

Doordash has an interesting business model and is the inspiration behind how various other food delivery models work. The idea is simple, to make delivery around a certain city easy and convenient. Doordash has moved beyond simply the food delivery market and is into the delivery market where people can get groceries and other kinds of stuff delivered to their doorsteps easily. 

Can you build an app like Doordash?

Yes. You can reach us for android based, iOS based, or hybrid mobile app development. Our experts can work on such models and also, customize them to suit your needs. 

Expert consultation on food delivery app development

Arun Goyal

Managing Director @ Octal IT Solution, a prominent Mobile App Development Company offering cutting-edge iPhone App Development and Android App Development services to Startups, SMEs and Fortune-500 Companies.

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