Paid shipping VS Free shipping?

by jkiley
18 replies
I have a website on which average order is about $300.00

What I am trying to figure out is should I charge for shipping or keep it free? Currently shipping is around $30.00

What if I keep flat shipping charges of $9.99?

Any thoughts?
#free #paid #shipping
  • Profile picture of the author tomerep
    Free shipping wins every time, most people don't want to go through the process of calculating shipping it just makes more sales when we put free shipping in our stores.
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  • Profile picture of the author attackdome
    Here's a secret... Raise the price of the product and do FREE SHIPPING. People get scared with high shipping costs and back out of a purchase because of it, but someone who is willing to buy a product and then realizes it has free shipping... ends up buying it.
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  • Profile picture of the author Frank Donovan
    Originally Posted by jkiley View Post

    I have a website on which average order is about $300.00

    What I am trying to figure out is should I charge for shipping or keep it free? Currently shipping is around $30.00

    What if I keep flat shipping charges of $9.99?

    Any thoughts?
    Depends on several factors, such as:

    - Your profit margins on the product
    - Your competitors' prices
    - Where most of your customers are located
    - The lifetime value of your typical customer

    There are more considerations, but if you want to find out what your customers prefer, the best way is to test it. Either reduce or remove the shipping cost for a limited time, or try a segmented offer to your existing buyers list.
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  • Profile picture of the author CenTex Hosting
    Free Shipping always seems to get better conversions on orders. Even if your product price is a little more.
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  • Profile picture of the author Steve B
    Here's my feeling . . .

    Shipping charges should be what the actual shipping costs. Yes, there is sometimes a cost to handling, packaging, containers, etc, and these are all part of the shipping charge. Why should you make money on shipping charges over and above the actual cost to you? You shouldn't. This is simply the cost you have to bear to get the product in the hands of the buyer. This cost is born by the purchaser. If buyers want overnight shipping, expedited shipping, or products sent to a foreign country, they should expect to pay more for those special handling circumstances.

    Likewise, the customer should understand that he/she bears the cost of getting the product delivered to their door. But why should they pay a premium for that delivery? Or why should they pay less than what is actually required to ship the product?

    If you decide to offer free shipping (which is often done as incentive to make an immediate purchase), I would suggest doing it as a one-time special bonus and not as a regular practice. You want this bonus to be a "special" or limited offer - not an everyday practice. Things that are offered as part of your way of doing business soon become "not so special anymore" - people begin to expect the same treatment in everything else you do. That can come back to haunt you later as shipping costs rise.

    Just my opinion,

    Steve
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    • Profile picture of the author Frank Donovan
      Originally Posted by Steve B View Post

      Shipping charges should be what the actual shipping costs. Yes, there is sometimes a cost to handling, packaging, containers, etc, and these are all part of the shipping charge. Why should you make money on shipping charges over and above the actual cost to you? You shouldn't. This is simply the cost you have to bear to get the product in the hands of the buyer. This cost is born by the purchaser. If buyers want overnight shipping, expedited shipping, or products sent to a foreign country, they should expect to pay more for those special handling circumstances.

      Likewise, the customer should understand that he/she bears the cost of getting the product delivered to their door.
      I get what you're saying, Steve. Here's the counter argument:

      You say the customer should bear the cost of getting the product delivered to your door. Offline retailers have costs too. There's the cost of storage; of getting the goods from the warehouse to the store; staff costs, heating, lighting; rent and rates etc. All these costs are reflected, in some way, in the final price charged for the product.

      An online retailer needs to factor in the costs of manufacturing or acquiring the products, the costs of maintaining the website, the software costs etc. In that context, the means of delivering the product to the customer (shipping) is just another cost of business. Some retailers choose to separate this as a charge at the point of sale, others incorporate the cost into the selling price. The decision is usually a marketing one based on standard practices or to gain a competitive advantage. Either way, it all washes out in the end - the business makes an acceptable profit or it doesn't.

      I agree that it's not wise to charge more than the actual cost of shipping and handling if the cost is added on to the sale. That will nearly always backfire on the retailer.
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  • Profile picture of the author Bill Jeffels
    If you're selling something that is $300 and shipping is $30 I'm assuming it's a large physical product.

    If I was the customer I would likely expect a shipping cost to be that high if the physical product required it.

    However, I can see you're concerned you don't want to shock your customer with a price that high.

    So, the other option is to change the price of your product to $329 with free shipping if it's still competitive and if you're that concerned about it.

    Bill

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  • Profile picture of the author gpacx
    It seems pretty obvious to me that you should be doing some kind of free shipping in this case. It obviously depends on whether you're currently profiting from that and how it affects your overall bottom line, but like others have said, you're going to lose far fewer sales at the shipping and handling options page if it's free.

    Lots of people click through the sale to figure out what the shipping will cost and get to a final price so they can make a purchasing decision. If someone is clicking through on your item, that means they haven't been deterred by the initial item cost and are trying to get to the final price to determine if they will buy it. Based on that, we understand that if the buyer sees that there are absolutely no additional fees, this is very good news!

    You'll convert more sales by offering free shipping, but are there other benefits? For sure - now when your buyer views your store the next time, they're likely to be a bit looser with the wallet and make more impulsive buying decisions because they can see prices for what they are right at the beginning.

    If folks in your store know that there are extra shipping fees on everything, they'll only click the items that they are most interested in to get a final cost. If they know that final prices are as advertised, they're making a buying decision almost immediately whenever they see an item so you're getting a lot more bang for your buck on your product listing page - buyers know they can react to an offer right away because there are no extra fees.

    You may need to raise prices a little bit to keep your numbers the way you want, but removing the shipping cost is going to work in your favor. I would also add that for low ticket items, it's often best to contain the price in the shipping and handling versus in the product value. For example, a $1 item seems super cheap and $3 to ship the item is also a relatively inexpensive shipping cost. If the item was $4, but shipping was free, now the item seems too expensive and it won't be bought.

    You have to try different models and figure out how your customers are making buying decisions.
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  • Profile picture of the author nenji
    Add the shipping cost to the product.
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  • Profile picture of the author vishwa
    Free shipping attracts more buyers. You can add the shipping cost to the product and offer the free shipping. Buyers will pay for the products not for huge shipping charges.
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  • Profile picture of the author johnben1444
    I think you should allow the customer to decide and include both free shipping and paid shipping that comes with tracking and faster delivery.

    Personally, I don't buy some products because the shipping is almost half the cost of the product or not worth paying for a secured transportation.
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  • Profile picture of the author vic1
    I would also suggest test using free shipping with your normal price, with higher price and with some type of add on to increase average sale.

    Personally, I hate running into a great deal only to find out I have to cough up extra $$ to get it.
    And I really hate it when the great deal turns out to be just a regular deal when shipping costs are added.
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  • Profile picture of the author naturalreo
    Free Shipping is best.

    Just thought you as a customer which part you take when shopping.
    Must your eye stop in FREE SHIPPING word.
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  • Profile picture of the author PPG19
    The statistic says that approximately 30% of shoppers will abandon their shopping cart if presented with unexpected shipping costs so if you want to charge for Shipping you should be upfront and add shipping costs where are always visible to the customers.

    It actually represent one the most crucial reason why people will abandon the shopping cart.

    You might be interested in knowing that another stat says that 8 out of 10 shoppers would buy more if they were offered free shipping. I don't know if this would be still valid for 300$ items but you could def give it a try...

    Launch a Promo for a couple of weeks where you offer FREE Shipping just to test it.
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  • Profile picture of the author Kay King
    It depends on what you are selling...and often on what competitors are doing, too.

    I've purchased major appliances online - and the $50-80 shipping fee included uncrating the product when it was delivered. The fees were justified to me as a customer.

    On the other hand - I will change vendor sites in a heartbeat if I am spending $100 or more and one site has cheaper or free shipping for a product I want to buy.

    Easy to test shipping costs with a free month or holiday special of free or low cost shipping.
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  • Profile picture of the author Splatterfox
    Stay with free shipping. It would even make more sense to put the margin on the product directly.

    I sold products worth more than 500$ the last year and made hundreds of sales, including free shipping. Its a great psychological motivator - customers usually even prefer it over a coupon of higher value.
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  • Profile picture of the author onlineworker11
    Its best to offer free shipping,this way you my get a returning customer
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