How to Estimate Shipping Costs | The Ultimate Guide

Trying to estimate shipping costs is one of the most challenging aspects of running an online business. In order to keep your customers happy and your wallet happy, you need to learn how to ship as efficiently as possible, including both inbound and outbound logistics. Thankfully, we at Box Genie are experts in packaging and shipping -- which is why we made this ultimate guide to help you estimate shipping costs for your online business. 

Have the Necessary Information Handy

The first step to properly estimating shipping costs involves having the necessary information handy! You see, shipping pricing is based on a variety of different factors, including the size and weight of the package and the destination. In order to get the correct size, you’re going to need to measure the shipping box’s length, width, and height in inches. From there, you’re going to need to weigh the box and its contents in pounds. 

Finally, you need the addresses of the origin of the package and the destination on shipping labels since carriers use shipping zones to calculate shipping rates. As a general rule of thumb, the farther your package has to be shipped, the more expensive the shipping price will be. That’s why it’s always recommended that eCommerce sellers either have a centrally-located warehouse or multiple warehouses spread out across different regions to cut down on shipping costs. 

Use the Right Packaging

If you want to do shipping right, you need to use the right packaging! While it might be tempting to just throw everything in the first box you find, that’s probably not the best course of action. Instead, you need to be strategic about your packaging. 

The first thing that you need to consider when it comes to packaging is what you’re shipping. Do the items require a lot of protective packaging and insulation? Do the items require reinforced packaging due to their weight? Generally speaking, corrugated boxes are the best option when it comes to shipping things cheaply and safely. 

This is because corrugated is extremely lightweight and won’t add to your shipping costs based on the dimensional weight. Corrugated is also extremely durable and protective, provided you choose the thicker flute options for items that need more insulation and protection. Corrugated is virtually crush-proof and puncture-proof -- definitely able to withstand a rough shipping process. 

When it comes to the ideal box sizes, you don’t want to go too small, but you also don’t want to go too big! It’s a good idea to provide the items an inch or two of space within the box. That way, there’s not so much space that the contents will move all around during shipping. 

We recommend having a few sizes of boxes available based on the general sizes of your products. For example, you may want to have a small box that measures 6x6x6 inches, a medium box that measures 10x10x8 inches, and a large box that measures 14x14x12 inches. If you have any questions about what packaging sizes or options would work best for you, feel free to reach out to the experts at Box Genie. 

Choose Your Carrier

Shipping costs vary dramatically depending on the shipping carrier you choose to go with. In the United States, there are three major carriers that you might want to consider: USPS, FedEx, and UPS. We are going to take a look at each one of them and discuss the pros and cons you'll encounter at checkout. 

• United States Postal Service (USPS): Run by the United States government, this is the service that puts the mail in your mailbox (or post office box) every day. But you can also ship through them as well! In fact, this option will often cost you the least amount since they run local routes every day anyway to deliver mail -- so adding your package to the truck isn’t that big of a deal. 
  
  However, they have a reputation of not being as reliable as the other services in terms of losing items, damaging items, and delaying items. Overall, if trying to save money is your biggest concern, USPS might be the best shipping method for you. 

• FedEx: FedEx is a company that is known for its international nature and its air freight system. It is also known for its reliability and customer service. Based on this information, if you’re going to be sending international shipments, FedEx might be the best option for you. 
  
  
• United Parcel Service (UPS): UPS is a company that is known for its domestic ground package delivery service. It is the world’s largest package delivery company that also has a reputation of being very fast and reliable. If you’re going to be needing ground domestic shipping, UPS might be the best option for you. 

Look Into Discounts

One thing that many online businesses aren’t aware of relates to the discounted rates that are offered by many carriers. Some carriers offer a volume discount for high volumes of packages. This could potentially be a great option if you have a high enough order volume to qualify. For example, USPS offers a volume discount for 5,000 parcels shipped in the prior year for first-class, priority, and express services. 

Other discount options include business discounts. For example, UPS offers a small business program that can save you 40% on all shipping for the first eight weeks of use and a certain discount level afterward based on the volume of your weekly orders. FedEx offers up to 26% off FedEx Express U.S. and international, up to 15% off FedEx ground, and up to 20% off FedEx office services. USPS’ business discounts aren’t quite as high since their prices are usually lower in the first place. 

In all, don’t always take the quoted price at face-value. Instead, always look into possible discounts and try to negotiate your shipping rates with the carrier based on your business status and volume. 

Choose Your Service and Delivery Time

Each of the three main carriers (USPS, FedEx, and UPS) have a variety of different service options and delivery timeframes available. Obviously, the faster the timeframe, the higher the cost. Here’s a quick breakdown of some of the different options that are available for each carrier:

• USPS:
  
  
• Priority Mail Express: Offers guaranteed delivery overnight or up to two days. This service can deliver 7 days a week and 365 days a year for an added fee. You can ship packages that weigh up to 70 pounds. 
  
  
• Priority Mail: Offers delivery in one to three business days with tracking and insurance included. You can ship packages that weigh up to 70 pounds. 
  
  
• First-Class Mail: Offers delivery in one to three business days for smaller packages and envelopes that weigh up to 13 ounces. 
  
  
• FedEx:
  
  
• FedEx Overnight: Offers guaranteed overnight delivery with several delivery time options: early morning, mid-morning, and afternoon. This service is available from Monday to Friday.
  
  
• FedEx Ground: Offers delivery in one to five business days -- with most packages arriving within three business days. 
  
  
• FedEx International: Offers international shipping services to more than 200 countries around the world. 
  
  
• UPS:
  
  
• UPS Next Day Air: Offers guaranteed next-day delivery by 10:30 AM or 12:00 PM. Includes free UPS packaging and a money-back guarantee. 
  
  
• UPS 3 Day Select: Offers guaranteed delivery within three business days. Includes free UPS packaging. 
  
  
• UPS Ground: Offers guaranteed and predictable shipping in one to five business days. 
  
  

Don’t Forget About the Extras!

In addition to the base rate for shipping, there may be added extras that you need to consider. 

• Shipping insurance: Protects against lost, stolen, or damaged goods during the shipping process. This is a good option for shipping expensive items. The rate of shipping insurance will be based on the declared value of your items, usually around 3% of the cost. 
  
  
• Surcharges: Shipping may include hidden fees for requesting pickup, fuel surcharges, return fees, etc. 
  
  
• Handling charges: You may be charged extra for special handling requirements if the contents of your package are considered dangerous or overweight. 
  
  
• Duties and taxes: You may be charged extra duties and taxes when you ship items internationally. The amount of these charges depends on what you’re shipping, the value of the contents, the country of destination, etc. All of these considerations can get complex and expensive very quickly, which is why it’s a good idea to think about this ahead of time, so you aren’t slapped with unexpected fees. 

Conclusion

Now that you know how to estimate and manage your shipping costs, it’s time to get moving! With the right planning, effort, and research, you can ensure that your products arrive at their destination quickly, safely, and inexpensively. 

Sources:

1. 10 Ways to Trim Shipping Costs | Entrepreneur
2. Shipping Insurance and Delivery Services | USPS
3. Duties-and-Taxes | FedEx