Calculating Shipping Costs – How to Make Accurate Estimates

Calculating Shipping Costs – How to Make Accurate Estimates

Ecommerce store owners often face an uphill battle when they have to calculate shipping costs and keep them low. Most shoppers now expect fast and affordable deliveries. Many even believe that shipping should be free, especially if they are making a large purchase from your store. But, as a store owner, you need to create a balance. Will these options affect your profitability?

In order to stay competitive in an increasingly cutthroat industry, you will want to make sure that you provide the best possible shipping options to your patrons and accurately calculate shipping costs. But that’s only possible if you evaluate your margins carefully. If you are able to manage your logistics and shipping costs properly, you won’t have many difficulties.

Unfortunately, this is much easier said than done. Here’s an example: let’s suppose you are selling a product for $10. The profit that you make off of that product is $3. But, that product is shipped in a big box, and the shipping cost is around $4. You run a promotion, and end up offering free shipping. Your profit is wiped out, and  you end up losing $1 on every sale. That’s not very business-savvy, is it?

The Importance of Calculating Shipping Costs

An ecommerce business owner needs to know exactly how much they are going to incur as shipping costs on every sale, for a multitude of reasons. For starters, it’s going to have a direct impact on your profitability. If you don’t know how much you are paying for shipping to a customer, you won’t be able to get a firm handle on your profits.

The second, and more important reason, is so that you can provide your customers with an accurate estimate. Depending upon the size of the package and the type of goods being shipped, the costs are likely to vary. You need to make sure that accurate information is provided to a customer on the checkout page. If customers find out that they were quoted another amount and charged another, it could wreak havoc on your company’s goodwill.

There’s no denying that having a strong ecommerce shipping policy could streamline operations and make matters much simpler for your business. Customers seriously care about the cost of shipping, and they don’t want to pay a cent more than they have to. In fact, shipping costs are widely regarded as the number one pet peeve amongst potential customers.

The third reason is so that you can calculate the threshold at which a customer qualifies for free shipping. If you don’t know your margins and shipping costs, you won’t be able to come up with an accurate figure. 

Additionally, transparency is key if you want to make a sale and increase brand loyalty. Your customers need to know all of the costs that they will be incurring so they don’t ditch your store and buy from another. Shipping cost hassles are regarded as the number one reason for shopping cart abandonment. There are many ways to reduce abandonment, and managing shipping costs is one of them. Here are

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This article was written by Najam Ahmed and originally published on The Official Cloudways Blog.

Disclosure: Some of the links in this post are "affiliate links." This means if you click on the link and purchase the product, We may receive an affiliate commission.

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