Shipping Costs: How to Calculate and Reduce
29 Jan 2021
The processes of shipment are not cheap because shipping rates go up year by year. The identification of any shipment cost is a question that bothers anyone – both sellers and buyers. Of course, it is of significant importance to know the price for the shipment. Here in the article let’s see the main points regarding shipping costs, figure out shipping costs calculators and try to answer a popular question: how to reduce shipping costs for small companies and bigger ones.
What do shipping costs mean?
The term shows transportation-related financial means. I keep it simple, we’d say that it’s the money spent on how products go through to reach the final consumer (including fuel, country taxes, transportation means, etc.). Usually, we find out the amount of money on average. The average shipping cost is being calculated via the analysis of factors that affect shipment. Those factors are product type, weight, dimensions, customer location, yours, interval, and transportation cost.
How to calculate shipping costs
As mentioned above, the cost of the shipment depends on several factors. Each of them changes the price. So, let us view the main metrics separately.
Dimension and weight
The dimensional weight (DIM weight) is one of the most commonly used metrics from the carriers’ point of view. This method views the package size to set the shipping cost. If the DIM weight prevails the package’s weight, some popular carriers (FedEx, USPS, UPS) charge the higher fee. If the weight number wins the DIM weight, carriers will use it for cost calculation.
There is another term used for the carriers – shipping zones (from 1 to 8), which are used to calculate the shipping rates and measure the way between the point from where the item went out and the destination. The lower is the shipping zone, and the cheaper will be the shipment.
When saying interval, we mean the time of delivery. Undoubtedly, consumers expect the fast shipment that becomes challenging when sending from only one place. And consequently, it becomes also more expensive (because of the zones mentioned above).
Shipping costs calculators
All the factors are taken into account by the top shipping carriers when determining shipping costs. We’ll have a look at the four popular platforms in the US and UK – USPS, UPS, FedEx, and Royal Mail.
USPS is considered to be the cheapest carrier for the ground shipment. The reason is their daily delivery system. Besides, now there is commercial pricing that allows discounts. You can calculate USPS shipping costs and thus reduce them.
There are different shipping options that UPS provides. Depending on them, and the dimensional weight, the pricings vary. Here also small businesses can get some discounts. And the UPS shipping costs and pricing can be estimated with the help of UPS calculator.
Dimensional weight is of priority in FedEx as well. The speed and means of delivery depend on it. FedEx suggests one shipping program called FedEx Small Business with significant benefits only for companies with growth potential. Also, the carrier has up to 16% discounts. FedEx shipping costs can be calculated on the website.
Royal Mail shipping
The UK’s postal service – Royal Mail is available for first and second-class deliveries every day apart from Sundays. Overseas delivery costs depend on weight and size—a perfect variant for sending items from the United Kingdom (and the Channel Islands included). eSwap suggests quick and precise calculation for your Royal Mail shipping costs by weight. Simply follow the steps.
How to reduce shipping costs?
Shipping costs include many points that business holders should take into account. And besides the actual price, you can come across several additional ones. So the issue of reducing shipment costs is fundamental. Let’s see the tricks that will help you.
Make the shipping distance shorter
No doubt, shipping fees depend on the distance. Shipping zones is the name of geographical places. They estimate the distance from Zone 1 to reach the destination. And logically, further the way, the more expensive the cost and the higher the zone becomes. So work for lower zones, save your money.
Measure the packages and change the dimensions
The cost of heavy items is higher (not a secret). Predictable prices are best, so importantly make the measurements on yourself considering the dimensions for precise calculations. As for the dimensions, keep in mind that It’s not reasonable to use big boxes for those items that weight little.
Look for discounts
Almost all the shipping carriers present specific packages ( especially for small businesses) at a discount or even for free. You can use these opportunities and save money. Sure, it depends on your items’ volume and the shipments’ frequency, but you do not necessarily have to ship hundreds of packages every day. You just get higher rates thus.
Use the offers from your platform/marketplace
Today many of the leading e-commerce platforms suggest their solutions, including shipping opportunities. They can combine features providing shipping applications or fulfilment service integrations. For example, Amazon offers Amazon FBA program that deals with all the shipping processes.
Cooperate with third parties to reduce shipping costs
One perfect variant to reduce your shipping costs is to use shipping insurance. You can use shipping insurance suggested by your carrier or find a different one. Of course, this is mainly a variant to consider for the items of high value.