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What Goes Into Shipping Cost?

Every year, American businesses spend about $1.5 trillion (yes, trillion with a T!) on shipping costs. And that number is going up almost every year despite the fact that shipping providers have become more and more efficient over the last decade or so.

If you feel as though your company’s shipping costs have gotten out of control, it’s time for you to take control of the situation. You can start to do it by figuring out what goes into your shipping cost every time you have something shipped out.

Believe it or not, many companies don’t bother to figure out how their USPS shipping cost, their UPS shipping cost, their FedEx shipping cost, and their other shipping costs are calculated. They don’t realize that they could be saving themselves a small fortune by putting a shipping cost calculator to good use.

Learn about the different factors that go into determining a final shipping cost below.

How Large Are the Products You’re Shipping Out?

One of the first things you should consider when trying to calculate the shipping cost for a product is what size the product is. The bigger that a product is, the more you’re going to have to pay to ship it.

It’s obviously going to cost you more to ship, say, a pack of pencils than it is a refrigerator. This is something your company should keep in mind every time you start selling a new product to your customers.

You should think about more than just the height and width of your products, too. You’re also going to have to account for the weight of them. Heavier products are going to cost more to ship than lighter ones.

Your company might be able to downsize your shipping costs by finding ways to make your products more compact. The smaller and lighter that you can make them, the cheaper they’re going to be to ship to your customers.

What Are Your Products Being Shipped In?

In addition to considering the size and weight of your products when shipping them, you should also factor in what you’re going to be shipping them in. The packaging that you use to ship products is going to play a big part in your shipping costs.

Some of the most common forms of packaging used for shipping purposes are:

  • Cardboard boxes
  • Padded envelopes
  • Mailing tubes

You shouldn’t necessarily skimp on the packaging that you use to save a buck on shipping costs. But you should carefully consider which types of packaging would work best for your specific products.

If you can get away with using padded envelopes for your products, they’re often more economical than boxes. They’ll reduce the need for tape and be easier to transport. It’ll result in you paying less for shipping than you might otherwise.

How Quickly Are You Shipping Your Products?

Do you need to ship your company’s products overnight all the time? Or can you get away with shipping your products to your customers within a week or so when you do it?

The urgency with which you need to ship products to your customers is going to have a definitive impact on your shipping costs. The sooner you need to send your products out to people, the more expensive it’s going to be.

You’re also going to find that different shipping providers are going to extend different rates on their next-day and two-day shipping options. It’s why you should shop around before going with one over all the rest.

Where Are You Shipping Your Products To?

When you go to ship a product, the final destination for it is going to affect the price you’ll pay for shipping more than you might realize.

Shipping something one state over might be very affordable. But shipping it across the country? That could very well be a much different story.

And if you’re going to ship your products internationally, that could open up a whole new can of worms for you. There are all kinds of international shipping rates that are going to apply to you when you ship items overseas. Luckily, if you’re shipping items of low value, international entry via section 321 may help you avoid these rates and taxes. If you’re wondering, “what is section 321 entry?”, definitely do some research before shipping your products.

It’s good for you to have an idea of what it’ll cost to ship products to different parts of the country and world. It’ll allow you to adjust your shipping rates accordingly so that you’re not paying too much in shipping costs.

Are You Shipping Products Yourself or Having Someone Else Ship Them for You?

For years, most companies shipped almost everything that they sold to their customers themselves. Unless it was physically impossible for them to keep certain items in their in-house inventory, they took care of all their shipping and handling on their own.

But these days, most companies have made a strong push to get their products to their customers ASAP. As a result, they’ve started to use different ecommerce fulfillment strategies to make this possible. This includes calling on third-party companies to help with shipping and handling.

If you take this approach to shipping products, it’s going to change the price you’ll pay to ship items. But it could be well worth it if you’re able to get your products to your customers quicker.

You should look into the different strategies that you could potentially use to ship your products from now on. They could save you a lot of time and money in the end.

Understanding What Goes Into Shipping Cost Is Important

Far too often, companies ship products to their customers without taking a close look at what their shipping cost is going to be every time they send something out. It results in them paying more than they should for shipping in many instances.

If you’re not keeping a close eye on how your company is handling shipping, you should change that today. It could revolutionize the way you do business and save you a ton of money each and every year.

Read the rest of the articles on our blog to get other useful business-related advice.

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