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Determining Shipping Expenses for Small Businesses

Shipping costs can be a considerable expense for small businesses

  • Written by Tess Holman
  • Published on December 19, 2023
  • Time to read 9 minutes

Introduction

Shipping costs can be a considerable expense for small businesses, impacting your bottom line and customer satisfaction. Whether you sell things online or in a store, How to calculate shipping costs for small business is essential. In this guide, we’ll chat about the things that affect shipping costs, how to calculate them, and ways to make shipping better for your business. By the end, you’ll know how to smooth your shipping process and make good choices for your business and customers.

Chapter 1: Knowing What Makes Shipping Costs

Before we figure out how to find the cost of shipping, let’s talk about the things that make it cost more or less. Shipping costs are not one-size-fits-all. They vary based on multiple variables. Here are some essential things that make shipping cost more or less for small businesses:

  • How Big and Heavy Your Package Is:
    • The size and weight of your package change how much it costs to send it. Heavier and bulkier items generally have higher shipping fees.
  • Where You Send It:
    • The location to which you’re shipping affects costs. Domestic shipping is typically less expensive than international shipping due to longer distances and potential customs fees.
  • Different Ways to Send It:
    • There are different options when choosing to send your products.  Services like Standard, Shipping, and Express have varying speeds of delivery. The faster you want something delivered, the more shipping will cost.
  • How Far You Send It:
    • The distance between your business and the destination impacts shipping costs. Shipping to nearby locations is usually cheaper.
  • How Much Your Stuff Costs:
    • The cost of your things affects the cost of shipping. Expensive things need more insurance or tracking, which costs more.
A dollar bill is shown next to a shipping box, signifying potential cost savings with well planned shipping
  • Different Shipping Companies:
    • Different companies send packages, like USPS, FedEx, and UPS. They have different prices.
  • Different Ways to Send Things:
    • How you send things, like by land, air, or sea, changes the cost. Faster ways cost more.
  • The Stuff You Use for Packaging:
    • The cost of boxes, bubble wrap, and padding adds to shipping costs.
  • Extra Fees and Gas Costs:
    • Sometimes, shipping companies add extra fees or gas costs. These things can make the cost go up.
  • Cost Changes at Different Times:
    • Sometimes, the cost of shipping changes during the year, especially at busy times like the holidays.

Chapter 2: How to Find the Cost of Shipping

Now, we’ll talk about ways to find out how much shipping costs. Small businesses have different ways to do this. Here are some standard methods:

  • Exact Cost for All:
    • Flat rate shipping is a straightforward approach where you charge a fixed fee for all orders, regardless of size or destination. This method simplifies pricing for you and your customers but may not always reflect the shipping costs.
  • Real-Time Calculators:
    • Many eCommerce platforms and shipping carriers offer real-time shipping calculators. These tools automatically calculate shipping costs based on the package’s weight, dimensions, and destination. They provide accurate quotes to customers during the checkout process.
  • Zone Based Shipping:
    • This method divides shipping areas into groups or zones based on shipping distance. You set different shipping rates for each zone, making it easier to account for varying distances.
  • Using a List:
    • You can make a list showing how much shipping costs are based on weight, way of sending, and where it’s going. This way, you can be more flexible, but it might be harder to manage as your business grows.
  • Mixing Different Methods:
    • You can use different methods together. For example, you can have a fixed price for some items and a real-time calculator for others. This way, customers can choose what’s best for them.
  • Adding More to the Cost:
    • Some businesses add more to the shipping cost to make more money. Just make sure to be fair and tell customers.
  • Free Shipping:
    • Some businesses offer to send things for free. They either make the cost part of the product price or their profit.
  • Special Shipping Memberships:
    • Some businesses have special clubs where members can get free or cheaper shipping. This makes customers want to shop with them more.

Chapter 3: How to Find the Cost of Shipping Step by Step

Calculating shipping costs accurately is essential for maintaining your small business’s profitability and ensuring customer satisfaction. Here are practical steps to help you determine shipping costs effectively:

  • Measure Your Packages Well:
    • Use a good scale and measuring tools to find your packages’ size and weight. You need accurate info to get an accurate cost.
  • Choose the Right Shipping Company:
    • Look at different shipping companies to find the best one for your business. Compare how fast they send things and how much it costs.
  • Use Real-Time Shipping Tools:
    • If you have an online store, put a tool on your website that tells customers how much shipping costs. This way, they know before they buy.
  • Get Help from Shipping Software:
    • Use software that helps with shipping. It makes it easier to create labels, compare costs from different companies, and print labels for many packages at once.
  • Don’t Forget Packing Costs:
    • Remember to add up your spending on boxes and other packing materials. This is part of the cost.
  • Think About Extra Fees:
    • Some shipping companies add extra fees for things like gas. Be aware of these because they can change the cost.
  • Try to Get Better Prices:
    • You can talk to the shipping company for a better price if you send many packages. They might give you a discount. Oftentimes, small businesses can fall into an in-between spot, where they aren’t large enough to get discounts. Still, their business could financially benefit in a significant way from discounted rates. 
    • This is where partnering with eHub works magic for the shipping part of your business. Because eHub has an extensive network of companies, we can negotiate better rates that these smaller companies can have access to. If you have more questions about how a partnership with eHub could benefit you, reach out today.
  • Check Shipping Costs Often:
    • The cost of shipping can change. Sometimes, gas costs more, or the shipping company changes prices. Look at your costs regularly and change your prices if you need to.

Chapter 4: Ways to Make Shipping Cheaper

Besides knowing the cost, there are ways to reduce shipping costs for your business. Here are some excellent ideas:

  • Give Customers Choices:
    • Let customers pick different ways to send things. This way, you and your customers can save money.
  • Show the Cost Before Buying:
    • Put a tool on your website that tells customers how much shipping costs. This makes it easier for them to know and stops them from leaving without buying.
  • Use Packing Wisely:
    • Pick the right size boxes for your things. Only use big boxes if you have to. You can also use eco-friendly packing to save money and make eco-conscious customers happy.
  • Free Shipping for Bigger Orders:
    • Offer free shipping if customers buy a certain amount. This can make customers buy more, and it helps you deal with the cost of shipping.
  • Get Help with Sending Packages:
    • If sending packages is hard, you can pay someone else. They’ll charge you, but it might be worth it if it saves you time and money.
  • Keep Good Records:
    • Make sure you know how much stuff you have in stock. This way, you won’t have to send things fast and spend more on shipping.
  • Use Shipping Tools:
    • Use software that helps you with shipping. It can connect to your online store and help you determine the shipping cost more efficiently.
  • Make Shipping Labels Fast:
    • Make shipping labels quickly and without mistakes by using shipping software. This saves time and money.

Chapter 5: Tips for Making International Shipping Cheaper

Sending things to other countries can be more complicated and more expensive. If you want to do it without spending too much, consider these tips:

  • Choose the Right International Shipping Company:
    • Find a company that sends things to other countries and isn’t too expensive. Some carriers specialize in international shipping and may offer cost-effective options.
  • Get Customs Right:
    • To avoid problems and extra costs, ensure you have the correct paperwork for sending things across borders.
  • Use Codes for Your Products:
    • Use the proper codes for your products so they get through customs quickly. Using the wrong codes can be a problem and slow down delivery.

Send Many Things Together:

  • If you often send things to the same country, put them all in one big package. This can save money compared to sending many small packages.
  • Send Things with All Costs Included:
    • Sometimes, paying for everything, including import taxes and fees, is a good idea. It might cost more upfront but it makes things easy for your international customers.
  • Keep an Eye on Costs:
    • Watch how much it costs to send things internationally because prices can change, and different money rates can affect costs.

Conclusion: How to Calculate Shipping Costs for Small Business

Finding out shipping costs and managing them correctly is essential for small businesses. It doesn’t matter if you sell things near you or in other countries. By knowing what makes shipping cost more or less, using the right ways to find the cost, and using tips to make shipping cost less, you can keep your business making money and customers happy.

Remember, the shipping costs can change, so it’s essential to watch it. Negotiating with shipping companies for better prices, using tools and technology, and staying up-to-date with the industry can help your business grow and be successful.

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