When starting up an online store, shippers often ask themselves, “What should I charge my customers for shipping?” It’s an important question, but luckily, the solution is fairly simple. In this quick guide, we’ve laid out two methods of figuring out what you should charge for shipping, which method we prefer, and why.
Method 1: Charge Shipping Prices Based on Average Cost-per-Package
A popular way to figure out what to charge for shipping is to calculate your average shipping cost per package. The simple formula here is to add up the total cost of shipping your packages for a month, and then divide that figure by the amount of packages you shipped in the same time period. Pretty easy, right?
Once you have the average cost-per-package, you can round it up to the nearest dollar and charge that figure for your shipping price. For example, if your average cost is $9.68, rounding it up to $10 is the simplest way to go. Depending on how far away your customers are, you’ll run into situations when your actual cost of shipping may be greater or less than this average. However, charging the average shipping cost for each package is the best way to stay in the middle.
Method 2: Offer Free Shipping With Your Average Cost Built In to Your Products
In our experience, offering free shipping is our favorite way to go. This strategy is similar to Method #1, but with a bit more “sleight of hand” involved. You will still need to start by figuring out your average cost per package for shipping. However, you wouldn’t charge that figure when your customers check out. Instead, you would build that average cost into the prices of your products themselves. While the math still works out pretty much the same, this creates the impression that your customers are getting more added value for their money.
Customers enjoy feeling like they receive added value as part of their online shopping experience, and offering “free” shipping is a great way to reinforce that idea. Simply put, we believe this method is one of the things that will keep your customers coming back for more…and customer loyalty is one of the benchmarks of a successful eCommerce business.