When it comes to shipping costs, there are a few ways to handle them depending on whether you run a small or bigger business, whether you ship within the country or globally, and so on. Here is how you can calculate the shipping costs so that your customers pay the lowest price possible and get their package in great condition and on time.
What are Shipping Costs?
Shipping costs are the costs of moving a certain product from a shelf in the shop or the warehouse to a customer’s house. The shipping costs include the following:
- The cost of packaging, boxes, stickers, and tape
- The cost that goes into paying a worker to pick up, pack and dispatch the product
- The cost for a courier to collect a product and deliver it
- The cost of importing/exporting fees for when you ship internationally
There are some additional costs like handling and insurance fees, but these are the essential and basic ones. As a retailer, your goal is to get a product off your shelf and to your customer’s front door for the lowest possible price and in the agreed time frame. You also want to ensure that the package arrives in good condition.
How to Determine Shipping Cost
There are three categories of shipping costs in total. Every one of them has its advantages and disadvantages. It is up to you to make a decision and choose a category that suits your business and your customers the best.
Calculated shippings are probably the easiest to handle. In order to get the price, you need to measure the weight and dimensions of the package you are sending. Then, you calculate the shipping charge based on the previously mentioned measurements and the customer’s location. It’s the easiest to use the common and reliable freight quote to estimate what the cost of shipping will be based on the information you provide.
The only downside of this method is that if you have numerous products to ship, you have to calculate the price for each and every one of them. However, though it takes time, this method is very beneficial since your customers get to have a shipping cost that is based on the product they purchased. So they don’t have to pay more. They pay the exact amount they need.
Flat-rate shipping is a method in which you charge one price for shipping no matter what the size, shape, and weight of the package is. The only time when this price will be different is when you ship items to different countries. By using this method, customers get to buy as much as they want and pay one fee only. The fee is set by you, the business.
This is a very popular choice with small businesses since it is reliable and convenient. For bigger companies that have more significant logical challenges, this might not be the most suitable method of shipping. If you want to offer a flat-rate shipping service, you need to calculate the average shipping cost for the whole business you run. Then, as the costs rise, you start to increase the shipping fees as well.
Free shipping is offered by a lot of retailers and there’s a good reason for that. Consumers simply love free shipping. As a matter of fact, it is one of the best ways for you to increase your sales. For a retailer on the other hand, there is a different story. If you are a retailer and want to offer free shipping, these are your two options:
- Build the cost of shipping into the product price. This will potentially make the product more expensive than competitors’.
- Absorb the cost of shipping and reduce the margins.
If you put the easily visible sign of “Free shipping on all orders” on your home page, customers won’t blink an eye before they start ordering from your business. This also makes the checkout process a lot easier and quicker.
What if I’m shipping globally?
If your business ships globally, there are some additional costs you have to take into account. This includes:
- Purchase price
- Transportation fees
- Currency conversion
- Duties and taxes
- Any other associated costs
Estimating the landing costs may not always be as easy due to the variables that are involved. It also depends on the country of export.in some cases, the costs of importing is on the buyer but other times it can be split between the seller and the buyer. This information needs to be dealt with before the shipping.
What Information Do You Need to Calculate Shipping Costs?
The four elements that are required for calculating the shipping costs are package weight, package dimensions, shipping point and origin, and expected delivery times. Using this set of information you compare the shipping rates by using a shipping cost calculator.
All in all, shipping costs may vary depending on what shipping method you choose. There are three types and it is up to you to choose the method that suits your business the best.