How to Setup Shipping Rates for Your Ecommerce Store

How to Setup Shipping Rates for Your Ecommerce Store

By Kevin Sides / Feb 16, 2017

“How do I set the shipping rates in my ECommerce store?” “How much should I charge my customers for shipping?” “Can I display live rates on my checkout page?”

 

These are 3 of the most common questions asked by our eCommerce clients. There have been a lot of studies conducted on this topic, but as your go-to shipping experts, we’ll break it down into 3 simple options. Then we’ll offer recommendations for which rate system will work best for you based on your products and shipping strategy.

 

First, one important thing you should know:

We’ve avoided giving exact prices because shipping costs differ based on product size and weight. That being said, the number of dollar signs in each column ($) identifies the range you should charge your customer. The more dollar signs, the higher price point you can charge.

 

Shipping Rates Option 1:

TypeDelivery TimeCost to Customer
Free Shipping (all U.S. orders)6-9 daysFREE
Economy2-5 days$
Domestic Express2-day$$
Domestic Overnight (3 options)Next day (9am, 12pm or end of day)$$$
International Economy10-20 days$$
International Express2-4 days$$$

 

Free shipping 6-9 days:

This is an optional addition, but is highly recommended! The number one reason people abandon their shopping carts is the shipping rate, so offering free shipping at the lowest cost to you is an excellent way to combat customer abandonment at your checkout page. You can download our How to Offer Customers Free Shipping eBook to learn step-by-step instructions on how to implement it, but the general idea is this: Offer your customers a free shipping option and then set the estimated delivery date a bit farther out than the average shopper will want to wait.

 

In this example, we’ve set 6-9 days, but we know what you're thinking: “I still have to pay for the shipping!” Yes, you will, but here’s what will happen:

 

A sizeable percentage of your customers aren’t going to want to wait an entire week, so they’ll upgrade to the next Economy option for an additional $5. Again for this example, let’s say shipping costs you $2.50. For every customer that upgrades to the $5 Economy option, you’ll be able to give another customer free shipping at no extra charge. It may seem simple, but trust us, it works! You’ll have to play around with the pricing and estimated delivery dates to test the elasticity your particular customers are willing to pay, but you get the idea.

 

Economy:

Economy is the same standard shipping method as the Free Shipping offer but with this exception: You’ll charge the customer a small additional fee to get the product sooner. Again, it’s no different than the free shipping option. It’s simply the illusion of FOMO (Fear of Missing Out) you’re creating by showing them how they can get their much-anticipated products sooner for a small flat fee. Try to use whole figures here to make it easier for customers to understand that, “for $5, I can get my products 3 days sooner. SOLD!”

 

Domestic Express:

Domestic Express 2 day is a great option to have on your checkout page. It allows customers that are in need of your products for an upcoming event—or flat out want it sooner—to pay a premium to get it within 2 days. Most customers who choose this option are probably in a situation where they really need the product, so the price is less of a factor. You can get away with charging more than the shipping cost itself because it’ll help offset those other free shipping costs and will increase your bottom line.

 

Domestic Express Overnight:

Express Overnight is exactly what the title implies. The only detail that you'll have to work out is the additional delivery time options available. Do your customers want the product by 9 am, 12 pm, or by the end of the day? All three of these options have different price points, so survey your customers to find out the most common need.

 

Economy International:

You’ll definitely want to include an international shipping option in order to reach a wider audience. And even if you’re not marketing abroad (yet) it doesn’t hurt to offer international shipping, especially considering how word travels via social media. Economy International is the standard shipping method to offer to all non-US customers.

 

Express International:

You’ll want to offer your international customers express delivery in case they’re in a pinch and need your products sooner.

 

 

Shipping Rates Option 2:

TypeDelivery TimeCost to Customer
Free Shipping (over xx amount)6-9 daysFREE
Economy2-5 days$
Domestic Express2-day$$
Domestic Overnight (3 options)Next day (9am, 12pm or end of day)$$$
International Economy10-20 days$$
International Express2-4 days$$$
 

 

Note: Everything is the same as Shipping Rates Option 1 except Free Shipping. Instead of offering free shipping to all customers, combat cutting into your profit margin by establishing a minimum order value in order to qualify for free shipping. Depending on the size and weight of your products, you can often include an additional item in the same order without having to pay much more. So before you dive in and begin promoting free shipping on your site, make sure you crunch the numbers! You’ll need to calculate average order value, shipping costs, and your profit margin with and without free shipping.

 

 

Shipping Rates Option 3:

“What about displaying live shipping rates?” We thought you’d never ask!

 

If you have the premium version of Shopify or are using another shopping cart that supports live rates, you can connect to rate estimators for FedEx, DHL Express, and USPS. These price calculators will pull live rates based on the customer’s shipping zip code and factor in the rate you’ve set up in your shopping cart. There is one minor caveat, in order for this to work, you will need to have the proper weights setup in Shopify or your shopping cart.

 

Note: More and more carriers are using dimensional weight to charge for shipping, so you’ll need to factor that in if your products are large but light.

 

You can change the rate to charge more for shipping to certain states or countries depending on your market research or a promotion you’re running. Also, if you have discounted shipping rates like our customers have, you’ll want to factor that in as well. If you want to keep shipping costs as low as possible, you can easily pass the savings on to your customers and charge them exactly what you pay for the shipping. There is one caveat, though: These are estimated rates. When your package arrives at the carrier’s sorting center, it gets weighed and if the package weighs more than what you’ve calculated in your shopping cart, then, the difference in price will be billed at the end of the month. There are some things you cannot pre-factor in such as, the amount to void fill, running out of boxes and using a larger box, etc.

 

If you don’t have a premium account to display the live rates, you can spend a little extra time and come up with a flat rate for each product—and product combination—based on the size of the box and its weight. You won’t be 100% perfect, but if you take the time to research the various factors, it’s only a matter of time until you’ll have honed in on a good flat rate.

 

Here are our recommendations for which carrier to use for each shipping method:

TypeRecommended Carrier
Free Shipping

0-1 lbs. DHL Expedited

1-5 lbs. DHL Expedited Plus (flys) or FedEx SmartPost (ground - but cheaper)

6+lbs. FedEx Ground
Economy

0-1 lbs. DHL Expedited

1-5 lbs. DHL Expedited Plus (flys) or FedEx SmartPost (ground - but cheaper)

6+lbs. FedEx Ground
Domestic ExpressFedEx 2-day Standard or Priority Mail (not guaranteed)
Domestic OvernightFedEx Overnight Standard
International EconomyDHL Global Mail Packet Plus
International ExpressFedEx Priority or DHL Express

 

If you’d like more information on the primary carriers, just shoot us an email and we'll send you our carrier overview. It has a breakdown of the individual carriers and what each has to offer.

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