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What is a Delivery Price?

Malcolm Tatum
By
Updated Feb 23, 2024
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The delivery price is the final price that is agreed upon by both the buyer and the seller in a transaction. In terms of investments, a delivery price normally refers to the price that must be paid the delivery of commodities when a futures contract expires, making it possible to completely settle the transaction. With commodities, this price is usually identified by clearing houses, and may include various fees and charges that are incurred as part of the transaction.

It is important to note that the delivery price is not necessarily the same as the unit price for a good or service that is delivered. For example, if a business orders a hundred units of a given item, and earns a five percent discount for ordering at least a hundred units, then the price identified on the invoice is adjusted to reflect that discount. Some businesses also consider any type of handling or shipping fees to also be part of the delivery price, especially if the order must be pre-paid. In this scenario, the delivery price is actually more than the cost of the items ordered, since it allows for those additional charges.

When it comes to investments, one of the key benefits of setting a delivery price is that the spot price on any given commodity is likely to fluctuate during the course of a trading day. By setting the price via the clearinghouse, this fluctuation in prices will not have an impact on whatever increases or decreases in the spot price happen to occur on the date that the futures contract is settled. This means the buyer knows exactly what must be paid in order to complete the deal, and the seller also has a firm understanding of how much he or she can expect to receive from the transaction.

Since there is some variance in how a delivery price is established in different settings, it is very important for the buyer to specifically ask about what he or she must pay in order to receive the products or securities that have been purchased. This helps to eliminate any assumptions about what is and is not provided for in the final delivery price, and makes it possible for the buyer to arrange payment for any additional costs that were not included in that figure. In some nations, specific regulations govern how the delivery price on futures contracts is calculated; in other settings, the process is established by the markets where the securities are traded and all members of that exchange are expected to abide by those terms in order to maintain their trading privileges.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.

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Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
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