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Blog / Beginner's handbook / Guide to Ecommerce Shipping Pricing Strategies [2024]

Beginner's handbook

A Complete Guide to Ecommerce Shipping Pricing [2024]

A Complete Guide to Ecommerce Shipping Pricing [2024]
Ksenija Lucko

By Ksenija Lucko

12 min read

To start an ecommerce business, you need four things: products to sell, a storefront to sell on, a payment gateway, and a means of delivery. Take one of the four essentials out of the equation, and it just won’t work. 

So shipping is a key part of your brand’s success, and shipping pricing—even more so. In 2022, the average cart abandonment rate reached about 70%, and 48% of that was due to extra costs like shipping and taxes. Meaning, the cost of shipping is one of the leading causes of cart abandonment

In the sea of online shopping opportunities, competition is as high as ever. Industry leaders like Amazon have conditioned shoppers to expect free, same-day delivery. In fact, 80% of consumers expect free shipping when ordering a certain amount of products, and 66% expect free shipping for all online orders. No matter how good your products are, customers simply won’t buy them if you overcharge shipping, or even charge it at all. 

How then can you offer customers a product that they’ll be willing to purchase without losing out on profit?

In short, you need to offer competitive shipping prices and make sure that whoever is delivering your products does their job well. 

Now that I have your attention, let’s dig deeper and take it step by step.

The basic elements of ecommerce shipping 

To decide how much to charge your customers for shipping, you need to first understand what shipping will cost you. 

Here’s what goes into the shipping price of any product: 

  1. Product size and weight. The shipping cost is directly affected by the size and weight of your product. The weight of your packaging and pack-ins matters too!

  2. Shipping destination. As a store owner, you need to decide whether you want to ship domestically, internationally, or both. And if it’s internationally, to which countries.

  3. Shipping method. Think about how fast you want your products to reach your customers. Shipping carriers usually offer different pricing for standard and express shipping.

Based on the combination of these variables, carriers will offer different shipping rates. You can then use these rates as a base to set up shipping prices for your store.

The variables might change over time as you remove and add products, expand the number of shipping destinations, or enable new shipping methods. Recalculate your shipping prices whenever such changes take place, so you don’t end up overcharging your customers or losing money. 

So far it doesn’t sound too complicated, right? But what happens if you’re using a print-on-demand provider? Well, you’ll be paying them to deliver your products. 

Here’s an example:

Let’s say you want to use free shipping to grow your store. The shipping price of your print-on-demand product (a t-shirt) is $3.99. That’s what you’ll be charged by Printful to ship one t-shirt once your customer places an order on your store. 

You can decide to charge your customers the same shipping price as Printful, or make it lower or higher—but you’ll still pay Printful $3.99. To make a profit and not pay for shipping out of pocket, you’ll need to offset the cost to your customer.

This means that, as a store owner, you need to keep in mind two shipping prices:

  1. The price you pay to Printful—the shipping rate we’ll charge you to deliver products to your customers.

  2. The price your customers pay you—this is what will show on your storefront and what your customers will be charged. 

Let’s dive deeper into how we calculate the shipping price that Printful charges you. After, we’ll explore shipping pricing strategies to help you offset the cost of shipping.

How does shipping work with Printful?

preview play-button

To give you a better idea of what to expect from Printful regarding shipping, in this section we’ll cover:

  • How flat shipping rates work at Printful

  • How live rates work at Printful and what the limitations are  

  • Why Printful's shipping prices are competitive

Printful rates

Flat rates

By default, Printful charges you flat shipping rates. The flat shipping rate is location-based and will stay the same regardless of which facility fulfills the order. That is, we’ll charge the same $3.99 for shipping your t-shirt to the US whether it’s fulfilled in the US or in Europe. 

If you choose to use flat rates for your store, then we’ll send your orders out automatically with the available carrier that offers the best value for your money at the time of the order. This means that for every order we’ll find the best service that’s affordable within that flat rate, taking into consideration the carrier’s quality, shipping speed, and price. 

The actual cost of shipping an item might be different, but we’ll always charge you the same flat rate fee. 

The prices are grouped by product category, so all items within a single category have the same shipping fee. Several items of the same category delivered in the same order will have an additional, lower fee. 

For example, the standard shipping rate for sending one t-shirt is $3.99. Every additional t-shirt in the same order adds $2.00 to the shipping cost:

  • 1 t-shirt = $3.99

  • 2 t-shirts = $5.99

  • 3 t-shirts = $7.99

You can find Printful shipping rates and calculation tips on our shipping speeds and pricing page

Live rates

Live shipping rates are shipping price calculations made by the carrier at the time your customer is making a purchase. Contrary to flat rates, it’ll be calculated by using the location of the facility where the order would be fulfilled and the destination address. The weight of your order will influence the final price too.

In some cases, when the destination is close to our production facility, the shipping price might be lower than it would be with the flat rate. In other cases, though, it can be higher. 

If you enable live rates, your customers will be able to choose one of the two shipping options at checkout—express (fast shipping) or standard. For some destinations, express shipping won’t be available. When this occurs, your customer will see only the standard shipping option. You’ll know which carrier service delivers your shipment in the order confirmation email. 

Live shipping rates on your storefront are currently available for five Printful integrations: Shopify, WooCommerce, and Launch Cart. Or, if you use the Printful API.

To enable live shipping rates on Printful’s side, head to Dashboard > Settings > Stores > Shipping

Why competitive print-on-demand shipping rates matter 

When focusing on the mechanics behind shipping costs, remember that the overall product price isn’t just the retail price. Both for you and your customer, the overall price charged will be how much the product costs and the shipping cost combined. 

It’s worth keeping this in mind when comparing the product prices of different print-on-demand providers. Whether a print-on-demand service offers competitive shipping prices is equally as important as what they’ll charge for their products.

In fact, if you choose a provider based on product prices alone, you may end up paying the same after factoring in shipping—but with lower-quality products to offer customers.  

And then there are some additional benefits to Printful’s shipping framework that could help you stand out from the crowd and win over picky customers:

  • We partner with all the major ecommerce logistics companies like USPS, UPS, FedEx, DHL, Canada Post, Australia Post, and Royal Mail.

  • Our goal isn’t to make a profit from shipping—we always choose carriers that are the best value for money when shipping your orders, depending on the delivery location and product type.

  • All our shipping carriers track orders, which can help you be upfront and manage customer expectations.

  • We offer 100% free returns if the shipment was lost in the mail or arrived misprinted, damaged, or defective. This is a major plus since 68% of customers consider it to be one of the most important qualities of ecommerce shipping.

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4 ecommerce shipping pricing strategies

Now that we covered the basics, let’s evaluate shipping pricing strategies you can use to offset shipping costs.

As we established before, shipping price and speed are a make-or-break consideration for online shoppers:

  • 75% of them admit that free shipping motivates them to make a purchase

  • 68% are influenced by the estimated time of delivery

  • 69.7% of customers would hesitate to purchase from you again if their order is delayed

  • 62% of shoppers expect their orders to arrive in less than three business days if they choose free shipping

Shopify statisctics chart showing the influence of the shipping price and speed on shoppers' decision to make a pirchase

Source: Shopify

And this is just the tip of the iceberg. Competition on marketplaces is high, and customer expectations are even higher. If you want to make sales and increase your retention rate, you’ll have to play by the rules—which means you can’t overcharge in your pricing. 

Luckily, there are several different shipping pricing strategies that’ll help you be in sync with customer expectations without having to sacrifice profit. Let’s take a look at the four most effective ones.

1. Incorporate the shipping price in the product price and offer free shipping

It’s clear by now that offering free shipping isn’t just a recommended pricing strategy, but a must. 

You can offer free shipping on all orders, for a specific order minimum, on specific products, for shipments going to certain locations, or keep it as an option only for loyal customers. Just make sure you’re offering free shipping in some capacity on your storefront and raise your retail product price to cover the shipping expenses.

1.1 Free shipping on all orders

If you’re selling small and lightweight products with a high-profit margin (like jewelry), add the delivery cost to the product price.

A few extra dollars on account of shipping won’t make a difference for customers who’re already eyeing expensive goods. But if you’re worried that the price increase will scare them away, reformat your price tags to make your expensive product look like a total steal

1.2 Free shipping with an order minimum

Setting a free shipping threshold is a time-tested way to increase a store’s average order value. The key is to set the threshold with your customers’ average order value in mind. The threshold has to be low enough so people still want to add more products to the cart, and high enough so that it’s profitable for you. 

Try one of these formulas to calculate the average order value on your store:

  1. Divide the total revenue by the number of purchases in your store.

  2. Take your store’s revenue, subtract the cost of running your business, and then divide that by the number of purchases in your store.

1.3 Free shipping for specific products only

You can use this strategy to run limited-time promotions. For example, you could encourage customers to buy:

  • New products

  • Slow-selling products 

  • Seasonal products

  • Products with a low shipping cost

1.4 Free shipping to certain locations

⁠If you’ve never offered free shipping on your store, deliver products for free only to certain cities, states, or countries. For example, you can offer free shipping to destinations where most of your current customers are to encourage even more purchases. Or, to bring in additional customers, you could offer free shipping to any promising new markets for your niche. If the strategy works and your sales go up, expand to more regions.

1.5 Free shipping for loyal customers

Run free delivery campaigns for returning customers to reward their loyalty. Set up an automated email that delivers a free shipping coupon code for customers depending on their purchase frequency, average order size, or other criteria. For example, you can offer free shipping for customers who have spent $500 in the last 90 days, or customers who’ve placed 3 orders in the last 60 days.

Another way you can offer free delivery to loyal customers is by building a loyalty program with free shipping perks. Enable free shipping to all loyalty program members or make it available to customers who meet a specific spending threshold (say $500 per calendar year).

2. Increase the price of products to cover part of the shipping cost

Another way to reduce shipping price shock is to include part of the cost in the product price from the get-go. This way, you can offer a lower delivery fee on the checkout page.

Let’s say you’re selling phone cases for $16.99 a piece. After considering all shipping methods, you decided to offer standard delivery for this product at $3.50 per item. Add $2 dollars to your product price, and reduce the shipping cost to $1.50.

Even though the money customers spend on the order is the same, the idea of paying less for delivery will make them feel better.

3. Let customers pay the full shipping price

If you’re looking for a hassle-free way to handle product shipping costs, charge your customers what your shipping (or fulfillment) service will charge you. Keep in mind, though, that ecommerce shipping tendencies and customer behavior over the past few years go against this strategy.

This option might work if your store:

  • Offers lightweight products with low shipping prices

  • Has earned your customers’ trust—the full shipping price is part of brand transparency

  • Sells one-of-a-kind products—the full shipping price isn’t a turnoff and customers are willing to pay extra

4. Combine different shipping pricing strategies

To meet customer needs, sometimes picking just one shipping pricing strategy isn’t going to cut it. You might need to combine different strategies.

That’s exactly what clothing, accessories, and home decor retailer Anthropologie does.

Anthropologie ships products globally. Both domestic and international customers can pick the delivery method they prefer.

Screenshot from the Anthropologie's page about shipping

Source: Anthropologie

The brand offers three shipping methods based on delivery time and shipping charges.

Screenshot from the Anthropologie's page about shipping

Source: Anthropologie

Returning customers are also welcome to join Anthropologie’s loyalty program to get extra shipping perks. And those who can’t wait to receive their package can pick it up from the store.

Screenshot from the Anthropologie's page about shipping

Source: Anthropologie

Putting together a shipping pricing strategy like this takes time, but it can be a game-changer if you want to cater to different customer needs while keeping shipping speed and price expectations under control.

What is your shipping pricing strategy?

Shipping is a fundamental part of your online business, so handle it with care.

If you end up overcharging for shipping in the race for profit, it has the potential to kill your store. But do it right, and your shipping prices can become a powerful tool to attract and keep customers.

Just like with everything in ecommerce, picking shipping prices that’ll work for both you and your customers might take time. Stay cautious, listen to what your customers want, keep an eye out for what other brands are doing, and always be ready to make the necessary adjustments.

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What’s your experience with different shipping methods and pricing strategies? Share in the comments!

author

By Ksenija Lucko on Dec 13, 2022

Ksenija Lucko

Blog author

Ksenija is a Logistics & Billing marketing specialist at Printful with a background in public relations. When she was little she decided to become a famous writer. Now she continues to practice creative writing, but with more realistic goals.

Ksenija is a Logistics & Billing marketing specialist at Printful with a background in public relations. When she was little she decided to become a famous writer. Now she continues to practice creative writing, but with more realistic goals.