How do I go about charging for shipping?

I have 3 keys for deciding what to charge for shipping…

Key #1. What are my competitors doing? Free shipping? Free shipping on orders over X amount? A low flat-rate amount? A really high amount (to make the product price look really low)? In most cases, you’ll want to follow suit. There's one exception to the "follow suit" rule, though... If your competitors are using real-time shipping quotes (i.e. charging actual shipping based on real-time quotes pulled from UPS/FedEx), I'd advise against doing that (even though your shopping cart platform probably has the functionality to do so). Always try to avoid charging actual shipping on your orders; it's simply not worth the hassle.

Key #2. Offer free shipping whenever possible. Customers LOVE free shipping. So if it doesn’t conflict with Key #1 above, I recommend offering free shipping to mainland USA whenever possible. (Note: This does NOT mean you “eat” the shipping cost; it just means the product price is sufficiently high to cover (i.e. bury) the shipping cost you’re paying. To ensure that you don’t lose money on small orders, you may need to only offer free shipping on orders over X amount and charge a flat-rate shipping fee for orders under the threshold. That’s fine… this is a good way to encourage visitors to buy more.)

Key #3. Ignore what you pay your supplier for shipping. A lot of folks get caught up on the breakdown between the product cost and the shipping cost their supplier charges them. Don’t! The breakdown is completely irrelevant. Profit = Total You Get - Total You Pay. All you care about is the grand total you receive from your customer and the grand total you pay to your supplier. Again, the breakdown between product costs and shipping costs doesn't matter at all! You should NOT waste your time (and possibly drive away your customers) trying to charge your customers a shipping rate equal to the amount you pay your supplier for shipping. How much you pay for shipping should have no impact on how much you decide to charge your customers for shipping.

1. Calculated shipping. Most ecom platforms have shipping modules that will give you calculated shipping rates based on weight.

2. Have a free shipping threshold . orders over $50, $100, $150 etc. Choose a level that will typically make people increase the size of their order based on the price of your items you sell.

I prefer not having just general free shipping for everything as not having shipping included makes the prices appear lower on first impression. If you have free shipping the shipping cost built into the product anyways. Once they see the shipping cost during checkout you can always have a upsell saying they only need to spend like $50 to receive free shipping, if their total is under that, say $35, they just need to spend $15 more to receive free shipping. Say the shipping cost is currently $8 in this scenario, many buyers will see it as I can spend only $7 more and get an additional $15 item which is a great deal. They forget about that they really didn't want that additional item but feel good as they got a good deal.

Point is free shipping offers with a minimum order are a great way to make a "spend more to save more" deal. People love getting more savings when they spend more.

My rule of thumb is... If I am not getting my items at a large enough margin to allow me to offer free shipping, I need to find a different supplier. Plain and simple.

Free shipping is a given in today's high volume marketplace. The fact is, you need to stay competitive with the big guys even if you're still starting out.