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How to Calculate Shipping Costs for Your Shopify Store

BeProfit logo - a white letter "b" on a purple background
By BeProfit Staff
Joel Taylor
Edited by Joel Taylor

Published July 25, 2022.

Signs  for shipping on flattened cardboard boxes

Having to manage shipping is one of the disadvantages of e-commerce. Shipping costs can be a major deal breaker for customers in the e-commerce industry, but it's also as simple as this: a high shipping cost will push customers away, while a cheap and accurate shipping cost will attract customers.

This post will discuss the factors affecting shipping costs and the best Shopify calculator apps that you can use.

How USPS Calculates Shipping Costs

Accuracy is essential when calculating your shipping costs; otherwise, undercharging the customer will cost you extra—and this is especially true if you plan on using a service like USPS to ship your products. The formula for calculating USPS shipping costs is as follows:

  1. Measure Measure the package, i.e., its length, width, and height. If the package is small you don’t have to measure.
  2. Weight Weigh your package using a scale. You can use a postal scale for better accuracy, but a kitchen or bathroom scale should suffice.
  3. Go to the USPS website Go to the USPS website and use the postage price calculator to compute the postal rate.
  4. Calculate Enter the destination details, dimensions, and weight of your package. You’ll then be given the available mailing options and transmit times.

Oversized USPS Packages

If you have an oversized package (between 108 and 130 inches in length or girth), USPS will charge you extra. Charges will be based on the weight of the item—the more the weight, the higher the cost. However, USPS does not ship items exceeding 130 inches or more than 70 pounds in weight. For that, you’ll have to choose a different shipping carrier like DHL or FedEx.

Factors Affecting Shopify Shipping Costs

Shipping costs differ for different stores even if they are using the same shipping method due to the following factors:

  • Shipping insurance
  • Duties and tax if you offer international shipping
  • Parcel-based charges if the product weighs more than the standard dimensional weight
  • Shipping-related charges if you mistakenly input the wrong delivery address

How to Determine the Best Shipping Costs for Your E-Commerce Business

There are five ways that you can determine shipping costs for your business, each with its pros and cons.

1. Flat-Rate Shipping

This is where you charge one fee for all shipping regardless of the weight, shape, and size of the package. It’s most preferred by businesses that offer similar products due to its simplicity and convenience. The recommended amount you should charge for flat rate shipping might vary depending on the size of products you generally sell, but it should vary between $7.00-$15.00.

2. Calculated Shipping

For this, you’ll need the dimensions and weight of your products. When customers purchase from your store, shipping will be calculated based on those measurements and their location. However, if you have a variety of different products for your store, it might be tiring to measure them all to determine how much to charge each purchase.

3. Free Shipping

If having a competitive advantage is what you're looking for, then free shipping will be the best method for your business—but you'll have to be clever; otherwise, you'll incur losses. You can offer free shipping in three ways:

  1. Include the shipping cost in the product price.
  2. Absorb all the shipping costs from your profits. It's a great deal for the customer but reduces your profit margin.
  3. Meet in the middle, where both the customer and seller share shipping costs. This is great for both parties since the customer gets a cheap product without affecting your profits too much.

4. Weight-Based Shipping

You charge shipping based on the weight of the customer's orders and will have to know the exact weight of all your products.

5. Price-Based Shipping

Here, you charge shipping based on the total cost of the orders. For example, for orders between $0-$15, shipping may be $7 while, for orders above $20, shipping might be $17.

Best Apps for Calculating Shopify Shipping Costs

Like Shopify sales funnel apps, Shopify also offers shipping calculator apps that make it easier for owners to calculate shipping costs and even provide discounts with certain shipping companies. The apps also offer additional features like sending alerts to customers during delivery times, collecting feedback, and generating labels. The best Shopify shipping rate calculators include the following, among others:

  1. OrderCup
  2. Easyship
  3. Shipping Rates Calculator Plus
  4. Shipup

Importance of Calculating Shipping Costs for Shopify

Calculating shipping costs is as important as calculating any other costs for your business, such as the cost of goods sold and customer acquisition costs. If customers proceed to checkout and find an outrageous shipping cost, they will likely abandon their carts and run to a cheaper store. Knowing your shipping costs will also help you make better financial decisions and overall business efficiency.

In summary, certain factors affect shipping costs and there are five ways to determine the right shipping costs for your Shopify store. Shopify shipping calculator apps and the best Shopify dropshipping apps simplify this while offering additional features, such as discounts.