Strategies for Using Shipping Carriers – Pricing Shipping

Standard

price sheet cropped

The United States Postal Service may be the only carrier you need to use if you have light items to ship, they are heavy and fit in Flat Rate Boxes, and/or they tend to be inexpensive.  In this post, I want to address shop owners who have more expensive, heavier, or a range of shipments.  That’s the shipping dilemma my wife faces.

In the six months she has been in business, we have shipped items worth up to $350 in weights ranging from a few ounces to over 50 pounds.   Her shop sells vintage items of all kinds as well as handcrafted items.  In this and the next post, I will discuss the two processes – first as she sets prices for the shipping on her site and second, how she chooses the carrier once she has the order in hand.

Pricing the Shipping Charges

 When setting the shipping charge in the listing, she weighs the item she plans to sell on a quality digital scale that I described in an earlier post.

  1. She determines if a Priority Flat Rate Box makes sense.
  2. Even if a Priority Flat Rate Box could work, she also estimates packaging in a box she would supply and adds that to the weight of the merchandise. At that point she does not know the destination of an eventual order but she wants to cover her shipping and packaging costs.
  3. I have created a handy rate sheet that shows rates for all USPS service options, UPS/FedEx rates and Flat Rate Boxes.  The sheet is for weights from 1 ounce to 25 pounds. This sheet assumes a US shipment to the furthest distance zone (8).  This will cover shipments to non-rural addresses within the Continental US (48 States) for FedEx/UPS and all US addresses (50 states) for USPS.
  4. Taking into account the value of the product and the service level desired for the shipments, she looks at the sheet and chooses an appropriate shipping cost for the shipment.
  5. Generally if the shipment is higher value (more than $50) and four pounds or more (round up to the nearest pound), she chooses the FedEx/UPS option.  The only exception is if the item fits in a Flat Rate Box and its cost is a couple dollars lower than the commercial option.
  6. If the weight (rounded up to the nearest pound) is three pounds or less, typically she picks the best USPS option, consistent with the service she wants to supply.

I already hear you asking, “What about orders that need to be shipped to Alaska or Hawaii or to PO Boxes?  You said earlier UPS/FedEx is not competitive to those locations for shipments of any weight and can’t deliver to PO Boxes”.  There are two strategies:

Assume that you will use USPS options to Alaska and Hawaii, rural areas, and to PO Boxes.  Generally the Parcel Select or Standard Mail rates are close enough so you won’t lose too much on shipping.

  1. State in your listing that your shipping charge is good for the Continental US. (48 States) and to message you for rates to other locations.  That way you can change your charges. If necessary, to cover expenses.
  2.  Using this process you will cover your shipping charges.  If the shipment ends up shipping to a closer destination or at a slightly lower weight you will have enough to help pay for shipping supplies and/or rebate some of the extra charges back to your customer.

Next up:  With the order in hand, process for picking the actual carrier.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s