How to Calculate the Estimated Shipping Cost
In this highly dynamic retail world, providing the customers with the best shipping rates is critical. You don't want to lead consumers through the whole purchasing process to have them leave their cart at the end due to increased shipping costs.
It is essential to calculate shipping costs that operate for both you and your consumers. To do so, you must first recognize how shipping affects product pricing and the variables used to measure shipping costs. In this article, we'll go through both of these aspects and more so that you can find the best shipping rates for your company. Let's get started.
What are Shipping Costs?
Shipping costs are the actual costs of transporting an item from a rack in your store or warehouse to a customer's doorstep. These expenses can include, but are not restricted to:
- Boxes, packaging, tape, and stickers are all extra costs.
- The cost of hiring someone to pick, pack, and ship an item.
- The cost of hiring a courier to pick up and deliver an item
- When sending abroad, the expense of import/export fees
As a retailer, your goal is to get a product from your shelves to your customer in the agreed-upon period, at the lowest possible price, and in perfect shape.
Related article: Free Shipping: 5 Tips to Make It Work
6 Factors to Consider When Calculating the Estimated Shipping Cost
Shipping costs depend upon several factors, including package dimensions, shipping type, weight, location, etc. After these variables have been determined, a carrier will assign a price to your shipment.
Here are six factors that can influence your online store's shipping costs.
All major carriers use a pricing strategy known as dimensional weight (also known as DIM weight). Dimensional weight considers the size of a package when calculating shipping costs.
DIM weight is determined by multiplying the package or box size's length, width, and height, then dividing by a common DIM divisor. Whichever is more extraordinary is the billable weight for which the company would be paid.
Value of contents shipped
If you're shipping great-value products, you should consider having your shipments insured. Shipping insurance compensates senders whose packages are lost, stolen, or harmed in transit. Though helpful, this service will significantly increase your shipping costs.
The packaged weight is the item's weight — no DIM divisor or measurement is needed. As previously stated, if this number exceeds the DIM weight, it will be used to measure shipping charges. The more costly it is to ship a box that is heavier and bigger.
Carriers use shipping zones to measure shipping rates. Shipping zones are the distances between the arrival and departure of a shipment determined based on the location of your package. This shows that two separate points of origin shipping to the same destination could be entirely different zones. As a general rule, the higher the shipping zone, the more costly it is to ship a package.
Customers anticipate quick delivery everywhere they buy online, thanks to Amazon Prime. That being said, if you only ship from one place, fast, premium shipping becomes more costly as zone numbers increase.
Unforeseen situations can arise at any time, no matter how well-planned your shipping strategy is. This may include anything from shipping delays to missing or damaged goods to split deliveries. Although you can never guess what will occur, leave some room for error in your shipping plan in times of trouble.