The Boss of You

One com­mon busi­ness ques­tion we help our smaller (and larger) online retail­ers with in our day jobs as web­site design­ers, is fig­ur­ing out how to price online ship­ping. As any­one who’s bought some­thing off eBay (and not paid atten­tion to the ship­ping costs), or who has tried to mail a care pack­age loaded down with good­ies to a friend on the other coast knows, ship­ping is not cheap. And when the cost of ship­ping is com­ing out of your bot­tom line — read: your pay­cheque — you really want to make sure you’re cov­er­ing your costs. That said, ship­ping is never a flat rate and mere dis­tance doesn’t always help tell the story of the final cost. There are sev­eral fac­tors that will impact ship­ping rates, things like speed, weight, size and dis­tance and unless you only sell one thing on your web­site it near impos­si­ble to fig­ure out what to charge as a stan­dard ship­ping rate.

So, in with all this uncer­tainty what do we rec­om­mend to our clients? In short: split the difference.

Start by fig­ur­ing out what the high end of your ship­ping is likely to cost, and the low end and find a mid­dle point. Then, be sure to track your ship­ping income, ie/ what you’re bring­ing is as ship­ping fees not just the price of items, and like­wise track what you’re spend­ing on ship­ping. At the end of each month (or after a really expen­sive trip to the post office) fig­ure out if you’re com­ing up even. In actual fact, you should really be com­ing out ahead. Your costs for ship­ping shouldn’t just account for the hard cost of mail­ing, but also for the envelopes/boxes, any pack­ing sup­plies you use and your time for going to the post office or pay­ing a staff per­son to do that for you. Now is it start­ing to become clear why ship­ping can cost so much?

Now before you go get­ting all pan­icky, think­ing that ship­ping on your $10 neck­laces is now going to cost $25, take a deep breath. One of the other ways you can account for the cost of ship­ping is in how you price your goods as a part of the Cost of Goods for pro­duc­ing your prod­uct (by the way, if fig­ur­ing out how to price your goods and deter­min­ing things like Cost of Goods makes your head spin, fear not, we’ve got a whole chap­ter on this in the book).

As you are set­ting your ship­ping rates here are a few things to think about:

• The weight of your goods: How much does it vary from one item to another? Say you mostly sell screen printed t-shirts, but you’ve recently added some awe­some brass belt buck­les to your store. Those buck­les may not be big, but their weight will ding you at the postal counter.
• The size of your goods: We have one client who mostly sells lit­tle trin­kets, brooches, bracelets and neck­laces but also sells these really big wreathes. Those pup­pies are going to need a big box and not fit in a padded envelope.
• Where are your price breaks rel­a­tive to your inven­tory? Lots of peo­ple give away free ship­ping for orders over $100, but what hap­pens if the one item in your cat­a­logue that’s over $100 is also the one item that is really heavy? Make sure you fac­tor the cost of ship­ping that sucker into the way you price the item.

I know that Canada Post (and per­haps US Postal Ser­vices do this as well) offers a Ship­ping Cal­cu­la­tor that you can plug into some shop­ping cart sys­tems so that shop­pers can fig­ure out the actual cost of ship­ping on items based on size and weight infor­ma­tion, but we’ve found that most online shop­pers want to get an idea of the cost of ship­ping for goods before they start shop­ping. They don’t want to be sur­prised when they get to the checkout.

Just remem­ber, if your ship­ping is start­ing to cost you money, you can increase your ship­ping costs, or increase the prices of your goods to make sure you’re not los­ing money for the plea­sure of ship­ping your prod­ucts to happy customers.