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How to price your shipping (Quick Guide)

by Murray Phillips,
Apr 30, 2024
how to reduce postage costs
how to reduce postage costs

Table of Contents

In a time where customer satisfaction hinges on swift and affordable shipping rates, it’s important to calculate shipping costs beforehand to prevent any losses for your business.

As a business, your goal is to likely balance healthy profit margins while keeping your shipping cost within market standards.

That said, if you want to learn how to estimate shipping costs and offer low rates, you’ve come to the right place. We’ll look at the several factors that impact shipping cost and tips on how you can ship packages as efficiently as possible.

Calculate Shipping Costs by Considering These Factors

Freight shipping can surprisingly get complicated, especially when trying to determine the actual cost. There are so many factors that pile into the price of each shipment haul. Learning about common factors allow you to tune your shipping strategy and save money in the long-run.

Lets dive straight into what drives up shipping charges below:

Point of origin and shipping destination

It goes without saying that the further the shipping distance, the higher the shipping costs. To gauge this, couriers use shipping zones and segments regions based on zip codes.

Regional or remote areas can incur higher shipping costs as well. This is because of increased transportation expenses, lower delivery volumes, and longer distances.

Shipping methods

Air freight, rail freight, land freight, and sea freight are the common types of shipping methods.

Ground shipping and sea freight (for international shipping) are best if you want a cost-effective solution. They’re also suitable for bulk or heavy items but naturally have longer transit times.

If you want a more expedited solution, air transportation is your best bet. However, do note that this method naturally comes at higher prices.

Package dimensions and weight

The size and dimensional weight of your package plays a significant role when determining the final cost. Heavy and bulky packages incur higher shipping fees because of additional handling charges. In addition, larger items just take more space in vehicles or warehouses.

Some carriers implement weight and size restrictions, so exceeding these limits generally result in higher fees.

Delivery times

Want a package delivered overnight? It’s likely going to cost you more than the standard 3-7 day service. Every company wants to offer fast or free shipping to bolster sales these days, so it’s important you know how to find a balance between customer satisfaction and costs.

Freight type and insurance

Some freight may require special handling, adding costs due to the extra work needed during transportation.

Additionally, businesses need to purchase insurance to protect themselves against losses or damage during transit. That said, insurance does have an impact on overall shipping costs. The higher the value of the product, the higher the insurance premiums.

Import duties and taxes

This is especially applicable when you ship internationally. For international shipments, import duties, customs fees, and taxes imposed by the destination country can significantly drive up costs.

Additional services

Sometimes there are extra fees associated with variables like parking tickets, special delivery arrangements, remote areas, and so on. Calculating shipping costs is essential for ecommerce businesses, impacting profitability and customer satisfaction by providing accurate estimates and determining thresholds for free shipping qualification.

Now that you understand the factors impacting shipping costs, it’s time to find that sweet spot between efficiency and cost-effectiveness.

How to Save on Your Shipping Costs

save more when shipping goods

Any company shipping items regularly will find that sometimes things go wrong. Items can be lost or damaged in transit. There can be unexpected delays, re-weighs, and other issues that will have an impact on the cost of shipping an item.

Strategies to reduce shipping costs include leveraging shipping calculators, using carrier-provided packaging, and using third-party insurance.

Compare carrier shipping rates

It’s no secret that shipping carriers increate their rates annually. These postage costs may vary by their service level, weight, and other factors.

Additionally, surcharges may apply during peak times such as holidays, when there is a surge in delivery volumes.

Carriers each have their own processes for calculating shipping. It can be labour-intensive to search through various options, trying to work out which company is the best fit. Using a shipping cost calculator simplifies finding low postage costs for both domestic and international shipping.

Optimise packaging

If you want to save on packaging costs, leverage the free packaging options offered by shipping carriers. You can also reuse packaging where possible, it won’t just save you money but it’s also great for the environment!

When packaging, consider making the most of the space within a box. Avoid large boxes with lots of empty space by filling the box with paper so it will be strong enough to hold its shape when it goes through the rough journey ahead.

Leverage discounted shipping rates

Shipping costs tend to eat into your profit margins, so it’s always good to leverage discounts whenever you can.

The good news? You don’t need to be a high volume seller to get discounted shipping rates.

If you’re selling on a ecommerce platform, you can take advantage of their bulk discount shipping services or promos. You can also negotiate shipping costs if you’ve been frequently working with a carrier.

Consider third-party insurance

You might consider extra insurance if items being shipped are valuable. Shipping insurance is important for high-value items. But you don’t necessarily need to avail the ones your carrier is offering.

Third-party package insurers are usually cheaper and you can match a level of protection with the value of your goods and enjoy lower premiums.

Of course, you need to check the insurance policies before sealing the deal.

Compare Shipping Rates with TransVirtual

Transvirtual not only helps you compare shipping rates, but also empowers you to maximize savings.

Our software breezes through complicated shipping cost calculations. It searches what’s available to match your variables, like destination, timing, size, weight, shipping prices, rates, and zones, and finds you the best deal, every time.

We also help keep shipping costs low by finding the best deals and considering a variety of shipping options available from carriers like FedEx, UPS, DHL, and Canada Post. Get the best price and ship freight immediately with TransVirtual today.

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