Forums: Discussions for entrepreneurs and small business.

Shipping costs can make or break your business. Strong statement, I know, but its true.  I worked very hard to minimize manufacturing costs - why give up margin on high shipping costs?  There are many articles relating to how much you should charge customers for shipping.  Should it be the true pass through expense, which is more for customers farther away OR should it be a flat rate that averages the shipping expense for everyone, OR should shipping be free to entice customers to buy?  Obviously each option will affect your bottom line and your retail pricing.  I’ll leave that for you to research, I chose the average shipping option.

However, there hasn’t been much discussion on which shipper is best - Fedex, UPS, United States Post Office OR some of the considerations on weight and sizing.  It doesn’t take a degree in Newtonian physics to know that a lighter package results in less cost.  But did you know that if you ship to certain zones (areas of the country), that package sizing trumps weight? So size does matter! Also, did you know that the shippers round the weight UP to the nearest pound?  So if you have a package that is 1 lb and 1 oz, it is considered a 2 lb package!  This rounding can easily double your costs!

I’ve found that retail pricing for Fedex and UPS to be significantly more than that of the United States post office. And that the price breaks I negotiated with postal annexes and these shippers are still more than post office priority mail. I’ve also examined my box type, sizing and packaging material to minimize size and weight.  I’ve replaced my corrugated boxes with lighter types and am using paper or airbags instead of peanuts. I may pay a little more for the type of box or packaging material just to keep the weight down. So keep your packages light and as small as possible and use the post office to minimize your expense and maximize profits.