How to Determine the Perfect Shipping and Handling Fee for Your Business

How to Determine the Perfect Shipping and Handling Fee for Your Business

Setting the appropriate shipping and handling fee for your business is a delicate matter. Set it too high, and your customers will be abandoning their carts at an alarming rate; set it too low, and your bottom line will take a hit.  

What You Need to Know About Shipping and Handling 

Shipping and handling is the complete process of packaging an item and sending it to its intended consumer. Shipping is the transportation of ordered items to customers and the costs associated with it. It includes all the fees and surcharges paid towards facilitating the transport of orders, from fuel costs to postage and delivery timeline.  

On the other hand, handling refers to all the costs accrued from buying packaging materials and hiring labor to pick, package, and load the products on a delivery truck. Simply put, it involves all the commercial contact that was made with the product from when it was received to when it is transferred to the care of a freight carrier.  

There are many factors you need to consider when determining shipping and handling fees. A few of these factors are: 

  • Warehouse costs 
  • Cost of labor  
  • Package dimensions 
  • Package weight 
  • Desired delivery speed 

Off course, if you’re shipping internationally, there are even more costs to consider. Some of them include: 

  • Customs 
  • Duties and taxes 
  • Parcel-handling fees.  

Understand Packaging Materials, Prices, and Weight Limits  

As an online retailer, it is vital that you understand all the different packaging materials out there and how to use them to protect your products from damage. Listed below are some of the most common packaging materials.  

  1. Boxes: Corrugated fiberboard boxes (cardboard boxes), paperboard boxes, rigid boxes, Kraft boxes.  
  1. Films and wraps: stretch film, shrink film, bubble wrap, plastic wrap, aluminum foil.  
  1. Bags: polybags, plastic bags.  
  1. Foam.   

The packaging material you should use depends on the product you need to package and how much you’re willing to spend on packaging materials.  

It’s also crucial that you understand the weight limits of your choice freight carrier. This is because shipping companies charge extra fees for packages that exceed the specified weight limit. Sometimes, these fees can cost up to twice the price of a regular shipment. The most popular courier companies and their weight limits are as follows: 

  1. FedEx: 150 lbs 
  1. UPS: 150 lbs 
  1. DHL: 154 lbs 
  1. USPS: 70 lbs 

Note that courier establishments estimate the weight of your package from its volume and actual weight. The heavier of both weights is the one you will be billed for.  

Tips on How to Calculate Your Shipping and Handling Costs  

Statistics show that the top reason why online shoppers abandon their carts is high added costs, and shipping fees make up a large percentage of those costs. Therefore, it is paramount that you find a shipping rate that is both convenient for you and attractive to customers.  

Calculate Freight Cost 

You can get the accurate freight cost for your package by getting an online quotation from your chosen carrier. Carriers determine freight costs by considering several factors like supply and demand in the package’s origin and destination, length of haul, the weight of the item, package dimensions, how quickly you need it to be delivered, added specifications, and the weather. Your choice of load type (full truckload or less-than-truckload) also contributes to the freight cost.  

Calculate Materials Cost 

Envelopes, stickers, boxes, tape, bubble wrap: all these things cost money and should be factored in when calculating shipping fees. The main rule for figuring out packaging costs is that bigger products attract higher fees. If you are not shipping fragile products, you can cut costs by using cheap but effective materials like cardboard, plastic, and bubble wrap.  

Determine Profit Margin Percentage 

When calculating your shipping rates, do not neglect to account for company profits. This is especially important if you are handling and packaging the items yourself, as it can consume a lot of time and energy.  

Choose the Right Shipping Carrier 

Determining the perfect shipping and handling fee is a balancing act for many online vendors. You have to pick a price low enough to attract sales, but not so low that your business incurs losses. A skilled shipping carrier helps you through this process by removing all the stress and confusion that can sometimes come with calculating shipping rates. When choosing the right shipping carrier, go for the one you can rely on to deliver your package quickly and safely. Your choice carrier should be able to instantly generate a quote with a bit of information, offer you competitive rates, and allow you to track your shipment.  

GoShip makes determining shipping and handling fees for your business a breeze. We are an online freight marketplace committed to making shipping convenient and affordable for small to mid-sized businesses. Our platform eliminates the need for a middleman or a broker as you can easily handle the entire process yourself. Visit our website today to compare prices from up to 42,000 carriers and get a free quote.