Calculate the Cost of Shipping as a Small Business

Business owner sat at a desk in their home office taking a phone call and using their laptop to book multiple parcels

Keeping your finances in order whilst staying competitive in your market means considering every expense and choosing the best options to suit your business model. With eCommerce, calculating your shipping costs is going to be a major step you take towards ensuring that the price of your product and delivery remains fair and appealing to your consumer.

While benefits and discounted pricing are advantageous, they are only part of what will influence your final decision. In this guide we will explain how to calculate your shipping costs whilst considering the customer experience to maximise sales and profit.

How to calculate your shipping costs in 6 simple steps

We’ve broken down typical shipping costs and how to calculate them into these six key considerations. While not an exhaustive list, the majority of your costs will fall into these categories. Follow along to help budget for your small business:

Weight

When you ship In the UK with Evri, parcels are priced by weight with our maximum weight being 15kg. Check out our prices to start breaking down your shipping costs, or for information on how to weigh your parcel, check out our guide.

Speed of service

Whilst our Standard service is just 2-4 days on average, many customers will expect next day delivery on many different types of products. You can send a parcel Next Day with Evri for just as little as 59p extra, meaning you can improve your product offering and customer experience without breaking the bank.

Tracking

Knowing where your parcel is during its transit and being able to prepare for its arrival is invaluable to a lot of customers. Whilst this service isn’t free with every courier and could come at a premium, end-to-end tracking is included for no extra cost on every parcel with Evri.

Cover

In the unlikely event that your customer’s parcel is damaged or lost, parcel cover could save the day, especially for higher value items. Thankfully at Evri we offer free compensation up to £20, with the option to increase that up to £999 for an added cost. Consider your product and whether this is standard practice in your industry, then if it’s in your budget we’ve got you covered.

Stoppage

As with all aspects of running a business, there will be issues that arise over time. It’s always important to budget in for emergencies to ensure that you’re able to hold firm in the face of adversity.

Packaging

Cheap and sturdy packaging is something you want to get right early so you’re prepared as your operation scales. Purchase sustainable packaging from an affordable and reliable retailer to keep on top of costs and ensure your products are delivered safely.

What’s included in your shipping at zero cost

When you ship your parcel with Evri, you’ll get a variety of benefits completely free with your purchase. This means that no matter what you are sending, your shipping cost calculation doesn’t need to be adjusted to include these features.

End-to-end tracking so your customer will always know where their parcel is
A 1-hour delivery window on the day for their convenience
Your customer can choose a safe place for their parcel or nominate a neighbour to receive it
Parcels can be diverted by the customer to a local ParcelShop, Post Office or parcel locker
3 delivery attempts and a free return for a non-delivery
Guaranteed photo confirmation on a successful delivery

As a business you can also take advantage of our bulk shipping tool, to make sending high volumes of parcels quick and simple. Or if you’re operating at a large enough scale, you can apply for a business account, which would entitle you to even more amazing benefits completely free.

How much should you be charging your customer for shipping?

Retailers typically determine their shipping prices using three primary models:

An older couple, a man and a woman, are sat on a sofa. They are laughing whilst using a laptop.

Free shipping

An ideal solution for the customer, but incredibly dependant on how much profit you are making on a single sale. Free shipping is most likely to be a benefit attached to high value orders, encouraging a purchaser to fill their basket more than they otherwise would to meet a threshold. It might be that the margins on your product are quite high, leaving room in the budget for free shipping. Consider the risk of cart abandonment in your audience, and whether your money is best spent on free shipping or improving your product or reducing the price.

Customers are becoming more accustomed to low-cost shipping that couriers like Evri are able to provide, so for many business models, free shipping won’t be do or die. Not to forget the most important part, if you are able to provide free shipping, you can shout it from the rooftops!

An Evri Courier delivering a parcel to an excited mother and child. The Courier is taking a photo for proof of delivery on their mobile device.

Flat rate shipping

An incredibly common model used when calculating shipping costs; flat rate shipping can offer your customers full transparency as early in the buying journey as possible to minimise risk of cart abandonment. Flat rate shipping does what it says on the tin – one price for every customer regardless of what’s in their basket. This is often achieved by using the profits from more high volume or high margin purchases to subsidise the cost for smaller or more costly orders. Get the balance right and the transparency you can provide will lead to an increase in conversions from checkout.

Customer sat at a desk holding a tape measure across their parcel to measure its size.

Variable rate shipping

Variable rate shipping is a model that prices the cost of delivery based on the size, weight or nature of the product. This rate could surprise a customer with a better shipping price than they were expecting or shock them with the opposite. As we’ve mentioned, many online shoppers are aware of impending shipping fees at checkout, so this method is certainly not out of the question. If, however, your most popular products are likely to accumulate a large shipping fee, it will definitely be worth looking at the other options as a means of subsidising that cost for your customers.

A close-up of a customer sitting on a sofa, holding their phone and looking confused at their screen.

What is cart abandonment?

Cart abandonment is when a potential customer decides not to proceed with a purchase after adding products to their card. One of the most common causes of this is unexpected charges such as delivery and service fees. These fees can lead to many customers re-evaluating whether they can afford to make the purchase, often leading them to inspect a competitor or even just reserve their spending entirely.

Studies have shown that as much as 70% of customers baskets are abandoned, with 48% of users listing the reason as unexpected fees. This is a scary number, but by effectively calculating your shipping costs, you can give users the information they need much sooner, assuring them of the price, avoiding any surprises at checkout and potentially securing a sale.

Calculate the cost of shipping as a small business