Forums: Discussions for entrepreneurs and small business.

I am working on my business plan and necessary financial projections.  Is there a formula for estimating shipping and packaging costs for a retail business?

I supposed I could do some long math, but there has to be a more efficient way.

THANKS!

DHL has a document online that shows their shipping fees from the origin zone to the place of delivery.  It shows different delivery options as well.  It may help you to get an estimate of your shipping fees for different areas in the country.

http://www.dhl-usa.com/resources/Published_Tariff_Guide_2007 _Final.pdf

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Oliver Mupas
United Bank Card
866-207-6007 ext 303
omupas@ubcnetworkonline.com

I believe for a business plan, you need to cover the cost of the following issues in reference to shipping. 

 

Where will you be shipping from and the cost for this location?

 

             Your home

             A regular warehouse location

             Will a 3^rd party shipper be doing your shipping?

 

How much will it cost to set up your shipping accounts such as Fed Ex, UPS, DHL, LTL freight, etc.?

 

Your shipping supplies.  These include all packaging and labeling supplies (boxes, padding, tape, tape dispensers, etc.).

 

An estimate number of packages shipped and where shipped to.  This is where freight rate estimates would come into play.  Also, will you be shipping out of country? 

 

You can get answers to these questions from UPS, Fed Ex, DHL, other freight services, SCORE and your local motor freight companies.  You can also get some information form “Inbound Logistics” at their web site.

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The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.

Setting up a UPS account is free. Once you have an account you can order shipping labels and invoice packets for free. If your items are large and need to go freight the try Fed Ex for competitive pricing.  For smaller items, ship ground and use the calculators offered on the shippers website. You will need to know the weight and dimensions of your package. Input several zip codes to get an idea of what shipping costs might be. Freight charges are typically 18% of the wholesale price of the product. They could be a little higher with gas prices rising but no more than 20% I`m sure. Handling fees will just be an estimate since you will probably buy foam peanuts in bulk and boxes in bulk. Once you have researched the above options you should have a pretty good idea of what the costs will be. Also be aware that if you are shipping via freight lines that the price only includes delivery to the customers door. Any type of set-up, or even to carry it into the house is an extra charge. 

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Sharon Murphy
Owner
Northwoods State of Mind, Inc.
NorthWoods

Thanks.  I was hoping there was a semi-formula for calculating. 

I will be shipping small packages from my inventory.  I know I need to look into packaging.  Most often will be 10x13" envelopes weighing less than 3 lbs.  Will be sending children`s apparel, cloth diapers and accessories and some cloth toys primarily.  I`ll probably have some heavier items as time progresses like wooden toys and baby gear.

There`s so much to do when opening a business, I thought there`d be just a hair less long math :)

Hi again,

There is a misconception that UPS accounts are free.  It cost nothing to set up the account.  But, there are pick up fees.  These fees depend on the type of account you set up.  If you don’t have a daily pickup account for example, you are assessed a pickup fee per order that is separate from your actual shipping fees.  If you are on a daily pickup plan, but don’t maintain a $60.00 per week shipping rate, you will be assessed another fee.  Same with Fed Ex and DHL.

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The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.

Nevadascul - I get around this by dropping my merchandise off myself at a local UPS store. If I already have the postage and label on it then I just drop it off and leave, no waiting in lines and no extra fee`s.


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Sharon Murphy
Owner
Northwoods State of Mind, Inc.
NorthWoods

Hi Smurph05,

 

Dropping off a UPS order is even more expensive when you factor in your time and gas.  UPS pickup fee per order is $5.00 if you do not have a daily pickup account.  For me to drop off that same order, I would pay $3.00 for gasoline for the round trip to the UPS center.  It would take me twenty minutes each way. Then I would normally stand in line twenty minutes to get to the counter.  That’s an hour of my time at $20.00 per hour (my lowest service rate).  Or, $23.00 total just to save a $5.00 pickup fee.  

 

Also, UPS offers substantial shipping rate discounts if you sign up for a daily pick up.  All you need to do is ship $60.00 worth of freight per week to realize the discount.  In my business, one small order meets the $60.00 limit.  

 

Fed Ex and DHL offer similar Discounts.  So, a person really doesn’t save any money by dropping off an order at a service center.  They may even be paying more in the long run.   It depends on the number of orders a person ships per week.

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The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.

I use the good old USPS.   It works well for me.  I ship most items Priority Mail, they provide the boxes.  They also have 2 different size flat rate Priority boxes (11" x 8.5" x 5.5" and 13.625" x 11.875" x 3.375") as much as you can fit in the box anywhere in the U.S. for $8.10 .  They offer a pick-up service, but you have to have the postage on the package. (I provide free shipping in the U.S. so I needed to find the most economical way.) There is no tracking service for Priority Mail though.  I just sent a box to Saudi Arabia that weighed 4.6 lbs. Global Priority and it cost only about $27.  They will have it in 5 to 10 days.  I sent the same size package UPS to the same customer several months ago, and it cost almost $200, but they received it in 3 days and there was tracking available. 

Anyone had any bad experiences using USPS or have any other comments?

Vicki 

 

USPS also has different flat rate envelopes . . . $4 and change.  And if you bring in a bunch of them at a time, the cost in time and gas isn`t that much (of course, I have a post office 1/2 mile away!).

jillybeans