Shipping costs

What belongs in shipping costs

Shipping costs are the cost of packaging and transport for an order. The calculation is wider than it looks: besides the pure freight price it includes packaging material, filler, the labour for packing, the handover to the carrier and a share for returns. Anyone looking only at the freight price makes the numbers look good, because returns can account for the largest part of the cost.

Shipping costs are not to be confused with customs and import duties. Those apply to deliveries from third countries and are legally a different matter, even if they feel like extra cost to the customer.

Which models are common

Four models are widespread. In the flat rate model the customer pays a fixed amount regardless of weight and value, which is easy to understand and expensive for the retailer with heavy orders. In the weight based model the price rises with weight, which comes closer to the actual effort and needs more explanation. In the value based model the customer pays more the smaller the basket is, which creates an incentive to order more. With free shipping the retailer carries the cost and builds it into the selling price.

When a shipping threshold makes sense

• Small baskets are expensive: if a single low value item is shipped, transport eats a large part of the margin. A lower limit guards against that.
• Incentive to add items: a threshold from a certain basket value measurably lifts the average basket, because customers top up the missing amount.
• Clear communication: the threshold belongs on the product page and in the basket, not only in the checkout. There it only works as a surprise.
• Commercial check: the threshold must not sit so high that ordinary orders barely reach it. A value just above the current average is sensible.

What is mandatory

Shipping costs have to be visible before the order is placed, and for every shipping method offered. Anyone advertising free thresholds has to state the conditions in full. For deliveries outside the EU, possible customs duties must be pointed out, and for goods that can only ship as bulky items the surcharge belongs visibly in the description. If one of these details is missing, a price dispute follows that the retailer usually loses.

Why they decide the checkout

In checkout analyses, shipping costs regularly rank first among abandonment reasons. The reason is less the amount than the timing. A customer who knows the final price before entering an address decides deliberately. A customer who learns it afterwards feels misled and drops out, even when the price is low in absolute terms. The most effective measure is therefore not waiving the cost but making it visible early.

Frequent questions

• Should I drop shipping costs entirely? That lifts demand and lowers the margin. It is a pricing decision, not a service decision.
• May I raise shipping costs afterwards? No, not after the order is completed.
• How do I show bulky goods? As a separate surcharge in the product description and in the checkout, not only on the invoice.