There are very few things more frustrating than undercharging on shipping. Knowing what to charge customers can be challenging and overwhelming, especially if you sell a variety of products of all different shapes and sizes. Here are some of the things to be aware of when shipping online orders and calculating your shipping prices.
How do I calculate shipping costs?
Shipping costs are determined by weight, dimensions, urgency, and destination. There are very few flat rate shipping options available because no two parcels are the same!
DESTINATIONS AND WHERE YOU ARE SHIPPING TO
Shipping costs within mainland UK and Northern Ireland stay the same, whether you are shipping an item one street over or sending it to the far reaches of Scotland.
International shipping is trickier. Royal Mail splits up the world into different zones while other carriers often operate a similar system or charge country-by-country.
A package’s weight is a major deciding factor in what to charge for shipping. Typically, each new gram increases the shipping cost however most shipping carriers bracket their services into different weights. For example, up to 100g, 100g – 250g, 250g – 500g.
Dimensions play a big part in shipping costs. The larger the package, the more expensive it becomes, especially if the item weighs considerable amounts.
URGENCY & TRACKING
Here in the UK, the faster you want something delivered, the more expensive the service. The same goes for parcel tracking and signature-on-delivery. Adding peace of mind adds cost.
How Royal Mail, Parcelforce, Hermes, and Other UK Carriers Treat Weight and Dimensions
ROYAL MAIL AND PARCELFORCE MAXIMUM DIMENSIONS AND WEIGHT
Royal Mail offers a range of services. The maximum weight is 20kg and the maximum dimensions are 61cm x 46cm x 46cm.
Anything over that weight falls into Parcelforce’s territory. Shipping via Parcelforce has a maximum weight allowance of 30kg and 3m length and depth combined.
HERMES MAXIMUM DIMENSIONS AND WEIGHT
Hermes works a little differently to other carriers, instead preferring to bracket its domestic services into weight rather than dimensions. The carrier also offers two levels of speed – Standard Delivery and Next Day Delivery, both of which cover a parcel value of £20. Anything above that value incurs an additional cost.
For some postcodes, Hermes charges £2.40 extra although this is only for a small part of the UK.
DPD MAXIMUM DIMENSIONS AND WEIGHT
DPD offers a wide array of shipping services as does UPS, FedEx, and other global shipping carriers with operations in the UK. These couriers can often carry larger weights than other carriers and larger dimension parcels. The best place to start is by entering the destination postcode to see what services are available, like DPD offers.
How much to charge for shipping
With so many options available and parcel dimensions differing from parcel to parcel, standardisation is really important. This means you can spend less time calculating shipping and more time selling.
Here’s a short checklist you can follow to make things easier for you.
- Take your top ten best selling items
- Add them to their normal packaging
- Weigh them and calculate their cost for a domestic delivery
- Check for differences and whether the items’ packaging could be the same
- Then offer a next day shipping price, one lightweight price and one bulky price
- Add your handling surcharge to the price
- Assess what customers think of the options
It is worth noting that customers have eased up a bit on shipping timeframes and demanding free shipping. However, demand for clearly communicated shipping times and simple pricing structures has become stronger. For the most information about how customers prefer shipping, download ShipStation’s research guide that goes into detail about shipping expectations.
DETERMINE SHIPPING COSTS ON ETSY
Etsy makes charging shipping costs pretty easy. There is no free shipping guarantee for UK shipping however if you are sending to the USA, you will have to offer free shipping on orders over $35. More information on how you can protect your margins and the tools Etsy offers is here.
DETERMINE SHIPPING COSTS ON AMAZON
Amazon is among the most rigid places to sell on—particularly if you want to become a Prime seller or to get the featured offer. Furthermore, offering free shipping is essential to being Prime or featured. Free shipping is a tad easier to offer if you can inject some of the shipping costs into the item’s price. However, this can be risky as you don’t want to be costlier than the featured seller. Many sellers cite Amazon as being a great place to get the word out about their products and some sellers just use Amazon as a marketplace for their lower-cost items with more affordable shipping prices.
DETERMINE SHIPPING COSTS ON EBAY
eBay has a few shipping guidelines to be aware of. For instance, you MUST use a shipping service with tracking if the item is valued at more than £20. You also can’t use a slower shipping method than what the customer selects. Shipping costs can be determined in eBay using its rate calculator.
DETERMINE SHIPPING COSTS ON YOUR WEBSITE
If you have your own website on platforms like Wix.com, Shopify, or WooCommerce, it is usually simplest to adopt some of the more favourable shipping options from your marketplace platforms. The important thing to keep in mind is that customers do have expectations of quick delivery. So, if you can ship out items within 24 hours, offer affordable shipping costs, and send shipping confirmation emails in a timely manner, you should be good! Let’s go over how to determine these shipping costs.
How Much to Charge for Domestic Shipping
Domestic shipping is usually pretty straightforward. You’ll find the shipping services that work best for your different items. The problem with domestic shipping is knowing what to charge. There are a few options that work well. Some are better for your customers and some are better for the merchant.
Flat-rate shipping is a good idea because customers don’t like surprises. This is why places like Amazon are so popular. Everything is quick, efficient, and easy to understand. Offering flat rate shipping is a good idea on your own website because it allows you to appear organised and in control of your shipping volume. Having different shipping rates for different items may be a good way to protect your profit margins, but it is less likely to result in an order being placed. Using something like “shipping is £4.99 for items under £75” is a good way to get cart conversions while also incentivising them to reach a threshold for free shipping.
Threshold shipping is very common. It allows customers to get free shipping if they place an order above a certain cost. Generally, it’s just north of your average order total. This can be a way to get another item added to the cart. Advertising high-profit margin items that cost under about £20 can be an easy way to reduce surplus inventory as well as increase profits.
Obviously, free is what every customer likes. If you can offer free shipping by injecting a little bit of the shipping cost into the item, do that. If you want to make these sales, you have to accept that your profit margin will narrow. Threshold shipping can be a way to get the best of both worlds, though.
How much to charge for international shipping
International shipping is an entirely separate beast. It can be confusing, expensive, and an insufferably long ordeal to get international customers their orders. Free shipping is almost always off the table, even to nearby countries in Europe, especially since Brexit changed the game.
CUSTOMS AND TAXES
Customs fees and import taxes can rack up quickly. And while it’s common for your customers to pay these import taxes, you may choose to pay them. And this can become a costly process. For instance, shipping to Europe has just become more expensive because VAT applies to all international orders from outside the UK. Fortunately, programmes like the IOSS allow you to pay these fees instead of your customers.
Even if you charge customers based on these additional surcharges, it is easier than having to have them deal with it. Again, taxes and customs fees make international shipping very expensive. And the difficulties don’t end with it being more expensive. What happens if an item is rejected or undeliverable?
RETURN TO SENDER VS TREAT AS ABANDONED
When an item can not make final delivery to an international customer, you’re left with the decision to just scrap the item or to have it shipped back to you. Remember, once an item clears customs, those charges may still need to be paid, even once they’re returned. This can cause the final shipping charges to be far higher than the item cost. At this point, it may just be easier to just treat the item as abandoned. These are shipping options that you can configure. But, it is important to remember that regardless of which option you choose, you should charge international customers accordingly.
How ShipStation helps reduce Shipping Costs
ShipStation is a great tool for understanding shipping costs. With all your orders laid out regardless of order source, with the ability to compare different services, you can figure out how much your shipping costs as well as how much to charge.
Additionally, shipping costs include the amount of time it takes you and your team to fulfill an order. Luckily, ShipStation’s automation rules and user roles make shipping simple, automated and avoids duplicate shipments. The leaner your processing time, the quicker your orders go out lets you work with a leaner, more efficient staff, pay less for shipping, charge your customers less—resulting in happier customers that give you better reviews and become repeat customers.