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Calculating shipping costs for an ecommerce business

Shipping is a necessary part of every ecommerce transaction. Store owners have to make sure they aren't losing money when it comes to order fulfillment and that they are properly measuring for the costs of getting products out to customers. There are many different strategies that store owners use when it comes to effective shipping methods, and they all have one thing in common: They take shipping fees into account and don't leave store owners paying them out of pocket.

Calculating costs ahead of time

An effective way to handle shipping costs is to figure out how much various combinations of items will cost when shipped. Both UPS and FedEx will switch their fee schedules to dimensional weight pricing, a system that measures the volume of a container as well as its weight, by the beginning of 2015. For ecommerce store owners, having an easily accessible list of the box or package sizes used in shipping will make calculations less complicated.

Another consideration is that USPS postage fees are seeing an increase in 2018 (learn more from the blog).

Once volume has been calculated, investing in a scale to weigh items can be considered. Using a scale will save money in the long run. Instead of the carrier rounding up when weighing a shipment, an ecommerce store owner can use the exact weight to calculate payment. This won't result in significant savings for an individual parcel, but it will add up over the course of months and years. Because UPS and FedEx haven't yet rolled out dimensional weight pricing, there aren't comprehensive official calculators in place. There are options currently available on the Internet, however, including one from shipping specialists Source Consulting (1). The only other item needed is a ruler to accurately measure box sizes. With this calculator, a scale, a ruler and the boxes that will be used, store owners can generate common shipping costs for the products they expect to drive the most sales.

Once estimated prices are ready

Having the pre-calculated shipping costs in hand, retailers have a few options. The estimated shipping cost can be presented along with a product or a bundle of items, allowing customers to understand exactly how much they'll have to spend. A popular approach is to build the estimated shipping costs into the overall price of an item. This approach presents a single number to consumers and also allows ecommerce store owners to say they offer free shipping - even though the customer is technically paying the cost.

(1) Dimensional Weight.

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