You’ve created your dream ecommerce website, added all of your beautiful product shots, and you’re about to set your product live to be purchased when you realize you’ve forgotten one huge aspect of your pricing.
Shipping costs!
Fortunately, there are several ways to calculate the shipping costs that you can choose from, which we will discuss in greater detail below.
We will also explain whether you or your buyers should incorporate shipping costs, along with other frequently asked questions on the topic.
No one wants their shoppers abandoning their cart at the last minute because you’ve massively miscalculated your fees, so let’s jump straight in and turn yourself into an expert in setting shipping costs.
Calculate Shipping Costs FAQs
What is the formula for shipping costs?
When it comes to calculating shipping costs, there is a simple formula to adhere to: Shipping and handling costs = Packaging costs (P) + Shipping costs (S) + Handling costs (H), or P + S + H.
How much should I charge my customers for shipping?
It is common practice to charge your customers a shipping fee as part of the purchasing process, but this could be removed as part of a sale or discount code, where the business incorporates the cost instead.
Who pays shipping costs, the buyer or the seller?
It is commonplace for buyers to cover shipping costs, and most businesses show these costs at the checkout.
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Don’t Skip: How to Find a Manufacturer
What Are Shipping Costs?
First, let’s identify what is classified as a shipping cost.
Essentially, the term “shipping costs” refers to any fees your company gets charged for moving your product from its storage location to your customer’s home.
That cost might include postage and packing, labor costs, and possibly import and export charges for international shipping or when your product warehouse is based abroad.
Is shipping really that important?
In short, successful shipping is crucial for a brand’s success. There is nothing more frustrating as a customer when you are hit by humungous shipping costs at the point of checkout, not to mention the knock-on effects of slow delivery.
Setting the right shipping costs for your business is vital for customer satisfaction, conversion rates, and repurchases.
How to Calculate Shipping for Your Online Store
Even if you consider yourself a bit of a math wizard, trying to calculate shipping costs can lead to a few headaches.
Fortunately, most shopping providers offer several tiers of shipping rates, so if you want to be completely hands-off, this can be a good option.
If you want to be in control of your costs, you can include factors such as package size, delivery times, customer location, labor costs, materials used, postage, and any import and export fees.
It still sounds complicated, right? Don’t worry; there is a simple formula to adhere to:
Shipping and handling costs = Packaging costs (P) + Shipping costs (S) + Handling costs (H), or P + S + H.
Once you’ve set your shipping costs, you’re done!
Okay, not quite. Impactors such as inflation will affect your costs, so always monitor your shipping costs and ensure they are correct and competitive in your market.
How to Apply Shipping Costs
Now that you know how to calculate shipping costs, let’s look at some of the options you have for applying them to your business.
Free Shipping
Based on the title, this sounds like the best option, right?
After all, who doesn’t love free stuff?
Unfortunately, free shipping isn’t free for everyone. This application refers to when a company absorbs the shipping costs as part of their profits, allowing the consumers to avoid paying this additional fee.
This is only possible when you have high-profit margins, but it can be a great selling point to convince new customers to try your brand.
In the future, as your brand grows, you could move away from this option.
Calculated Shipping
Calculate shipping costs are costs that vary depending on the weight and size of the package and where it is getting delivered to.
To ensure complete transparency with your customers, offer them a shipping calculator to ensure their experience with your brand has no nasty surprises at the checkout page.
While it is the most complex option, it is the most cost-effective and ideal if you sell heavy products.
Flat Fee Shipping
If you would rather keep things simple, flat fee shipping allows you to provide customers with a clear upfront cost, making it simple for them to understand.
This option saves plenty of time and effort and allows you to focus your efforts on other aspects of your brand.
Shipping Internationally?
While the above information is excellent for national shipping, there are also a couple of additional aspects to be wary of when shipping internationally. For example, you’ll likely be charged for other costs such as fuel, not to mention pesky import and export fees.
Keep Learning: Your Guide to Product Packaging Design and Strategy
Shipping Costs? Tick. Now It’s Time to Ensure Your Store is a Winner
Now that you have a firm grasp on how to set your shipping costs, it’s time to ensure your brand-new ecommerce store is a huge success.
Take our free masterclass on how to open an ecommerce store to give yourself the best chance of success.
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