How To Calculate Shipping Costs for Your Store

Learn how to calculate shipping costs for your online store using carrier shipping calculators.

There’s a lot that can happen between Point A, when an order leaves your hands, and Point B, when it arrives at a customer’s door. 

Delivering a great shipping experience is just as important as delivering a great product—according to one study, 85% said they wouldn’t buy again from an online retail store after a negative shipping experience.

With a bit of prep work to define and communicate your standard shipping policies, and some thought given to how you’ll handle specific inquiries, you’ll be able to handle the most common shipping questions customers have—and create a great experience for them even when the order is literally out of your hands.

How to calculate shipping costs

There are a few key factors to consider when calculating total cost for shipping for an online ecommerce store. 

• How fast you’d like the package to get to the destination. Getting a delivery to the customer as quickly as possible comes at a cost. As a general rule, the quicker the shipping, the more it costs—and the more it eats into your profit margins.

• How valuable the package is. When you ship high-value packages, you’ll likely want some insurance to cover it in case it gets lost, stolen, or damaged during shipping. The last thing you want are complaints about these unfortunate incidents.

• Where the package is going. Simply put, the farther your package travels, the more it will cost in transportation and work hours. This also combines with the speed of delivery—if the package is traveling far and fast, it will cost a lot more than local delivery.

• How much the package weighs. Shipping tends to cost more depending on the weight of the package, because of weight allocation and limits applied to transport vehicles. As a result, shipping companies need to charge more to make money on their delivery.

• The physical package dimensions. Similar to the above point, larger packages have what’s known as “dimensional weight.” If your packages are more substantial, the transport vehicles can’t take as many other packages and need to charge more to make up the difference.

• Extra costs for unexpected issues and fees. In the world of logistics, lots of issues can come out of nowhere. Delays due to sudden road closures, natural disasters, worker strikes, or even just unforeseen taxes. Considering these kinds of unexpected events within your shipping budget can help offset losses when they do happen.

All of the above factors help in determining your overall shipping costs. However, the importance of some factors over others can depend on where your business operates and where your target market is. 

For example, if you operate in the US and only ship within the US, you won’t need to worry about international shipping costs and foreign import taxes.

Calculate shipping with Shopify Shipping 

One of the best advantages of using Shopify for your ecommerce business is that shipping comes built into the platform. With Shopify Shipping services, you can save hours on your order fulfillment since it’s all in the same place as your inventory management, invoicing, customer details, and product management.

Shopify Shipping works by helping you set up default and discounted rates based on shipping zones and shipping profiles. 

For example, you can offer your customers free shipping, flat-fee rates, or calculated rates (based on weight and/or distance). You can also offer local delivery within a certain area radius, or local pickup if you have a brick-and-mortar store.

Here are some of the best features and benefits of Shopify ecommerce shipping services:

• You get discounted best rates (up to 88%) with USPS, UPS, and DHL.
• You can buy and print labels from Shopify directly, no special equipment needed.
• Shopify Shipping comes with $200 shipping insurance against damage, loss, and theft at no extra cost.
• You can optimize your workflow with options to fulfill orders in bulk, creating scan forms, and arranging pickups with UPS and DHL.
• Package tracking also comes built in, so you can quickly answer questions from customers about their orders.
• You pay one simple bill that includes your shipping costs and Shopify subscription.

Shopify Shipping offers all of these features and more to help you start your business quickly, and scale efficiently when you’re ready.

Shopify Shipping has allowed our business to grow. We’re not buried in fulfilling orders—we’re able to concentrate on thinking about where our business can go long term.

Uchenna Ngwudo | Cee Cee’s Closet NYC

Calculating shipping costs with a shipping calculator

When you use third-party shipping companies directly (instead of using them through Shopify), you’ll need to go to their websites and calculate your shipping with them. Most shipping companies have their own shipping cost calculator, as you’ll see below.

1. UPS

When shipping direct with UPS, you can use the above calculator to help determine shipping costs and types of shipping you might want.

This calculator is more complicated than others on this list, as it gives you lots of options to work with—however, as a result, it can work out to be more cost effective if you’re using exact weight and dimensions.

2. USPS

The United States Postal Service (USPS) has one of the simplest shipping calculators on the market, particularly since it only requires a ZIP codes to figure out cost (instead of a whole address).

While you can choose the preset rates (the example above uses box sizes), you can also figure out shipping using exact dimensions . 

3. FedEx

The FedEx shipping cost calculator is similar to USPS. But while testing out the calculator we found it a little more difficult to deal with, due to it not allowing us to calculate shipping more than two days in advance (which naturally displays a higher shipping price than other options).

4. DHL

DHL is a massive player in the shipping/logistics industry, so it has to be included on this list. However, it doesn’t have an interactive shipping calculator, per se.

You must go through its website and request a quote for shipping fees. But it works the same way as the other calculators on this list, regarding questions asked and results given.

The only difference here is that you can easily proceed with your quote immediately after requesting details.

Shipping options to offer

Offer free shipping

With shopping cart abandonment rates at around 69%, you’ll want to try everything you can to avoid the loss of sales. Extra surcharges for shipping and taxes are the biggest contributors to abandoned checkouts, according to research from Baymard Institute:

So one of the best ways to combat abandoned carts is by offering free shipping. But we all know nothing is ever truly free. In the case of free shipping, someone still pays for it. 

That means either the customer pays more on the price of an item or you pay more out of your margins. You can split the cost of shipping between you and the customer by slightly increasing product price and setting a lower profit margin. 

Another option is to have a minimum order amount before offering free shipping to help offset shipping costs, as this strategy helps to increase average order size. But it might not be the best option for you, as you’ll still need to pay out of pocket for those orders that reach the threshold.

Charge real-time carrier rates

When you opt to use Shopify Shipping, you can charge your customers real-time shipping rates through ecommerce integrations. These integrations work directly with carriers like USPS, Canada Post, UPS, and others to generate live shipping costs based on the exact service your customers want. 

Using this method, you can save money, as some shipments will be cheaper than with a proposed flat rate regardless of shipment size and speed. You can also let customers choose expedited shipping options at a fair price. 

Charge a flat rate

One of the most popular options is offering standard flat rate shipping. If you offer a standard product line of items of similar sizes and weights, or even a single item in your online store, charging your customers a flat rate for shipping can be a more effective and simpler option. 

However, if you offer many products of various sizes and weights, this option becomes more complicated and less effective. The best practice with charging flat rates is ensuring you don’t overcharge or undercharge your customers.

Offer local delivery

For small businesses, especially those with brick-and-mortar stores, offering local delivery can be a great option. With local delivery, you can offer next-day service, since you don’t need to rely on shipping companies being on time. 

To implement up local delivery, you can set up a radius based on your address or select a list of ZIP/postal codes to deliver to. With this method, when a customer is within your defined delivery area, they’ll be able to select local delivery at the checkout as a shipping option.

Offering low-cost or free local delivery over a certain amount of money spent is a great way to lower your shipping costs and well as build relationships with your local customers.

Learn: 6 Ways to Reduce Shipping Costs for Small Business

Lay the foundation with a shipping policy page

When faced with a purchase roadblock or question about their existing order, the first place many customers will check is a store’s shipping policy or FAQ page. 

Populating this page with the right information helps customers find answers quickly, and reduces the need for them to contact you. It can also win sales: According to the UPS Pulse of the Online Shopper survey, 68% of online shoppers view a shipping policy before making a purchase.

Setting up a shipping policies page is straightforward. Create a new page on your store, add a link to the page in your footer, and make sure to include information about:

• Tracking shipments
• Shipping options and delivery times
• Returns and refunds
• Customs and international shipping availability
• Lost or damaged packages

The details of any individual policy will depend on your business, your products, and your margins, but having a central location to direct your customers to is the first step in proactively managing common shipping questions.

The details of any individual policy will depend on your business, your products, and your margins.

With your new page in place, it’s time to address specific questions. Here are a few you’re likely to encounter.

Common questions about shipping

1. How do I track an order?

Once your customers complete their purchase, they really only have one thing on their mind: When will their order show up? This question can arise despite your best efforts to clearly display estimated shipping windows, which is why making shipment tracking available as early as possible is important.

How to solve

The more effectively you communicate available tracking options, the fewer follow-ups you’ll get from anxious customers.

In MetaPack’s Post Purchase 2022 report, nearly 95% of shoppers said the ability to track their orders was very important. Adding tracking numbers to all fulfilled orders can save you a lot of questions down the line. You can also offer ePacket tracking to put the power in the customers’ hands.

You can add or customize an order status page in your store. After adding a tracking number, your customers can use it to view shipping updates from their order page.

If you’re a merchant in the US or Canada, tracking is included with most carriers available through Shopify Shipping. Once you buy a label for an order, the tracking number is automatically emailed to your customer.

By surfacing tracking information where customers are likely to look—e.g., post-purchase emails and your Order Status page—many customers will be able to answer “How do I track my order?” on their own.

How to support

For the remaining customers that contact you to troubleshoot, first confirm that their transaction went through and the order has shipped out. After that, you can send tracking information and instructions directly. To anticipate potential follow-up questions, consider mentioning:

• The day you shipped the order as well as the estimated delivery date
• A direct link to the tracking page for the carrier you used

If you haven’t shipped the order yet, note that to the customer and provide them with expected delivery dates. If you don’t have any available tracking information, set a reminder to follow up with them once you have it.

Empathy for your customer’s current situation and mood can influence the tone and phrasing of your response. Money may have just changed hands, and the customer is messaging you with a degree of uncertainty or frustration as to whether they’ll receive what they paid for, and in a reasonable timeframe.

Acknowledging any frustration they may feel goes a long way toward turning a potentially negative experience into a positive one.

2. How do I return or refund an order?

Returns are an unavoidable facet of running an online store. While the average return rate typically hovers around 20%, around the holidays rates can rise to 30%. An intentional strategy to account for and handle returns—and one that’s clearly communicated to your customers—can help you create a smooth process for everyone involved.

How to solve

Your existing shipping policy page can house any information you’d like to provide about returns. Specifically, there are two big questions you’ll want to answer if you offer returns:

• What does it cost to return an item? Free return shipping is fast becoming a basic expectation. While it’s not financially feasible for every business, sharing your return shipping strategy and cost—whether it’s flat rate, exact cost, or free—on your policy page will help preempt questions and set expectations.
• Do you offer returns, exchanges, or both? Answering this question upfront will prevent disappointment down the line, even if you don’t plan to offer either option. That way, at least customers know ahead of time.

Here are a few carriers that allow you to offer return shipping labels to your customers:

• USPS
• FedEx
• UPS
• DHL
• Canada Post
• UK Royal Mail
• Australia Post

If you’re a Shopify merchant in the US, you can create USPS return labels for domestic orders and send them to your customers from the order page. You can print UPS return labels if you have a UPS account added to Shopify.

How to support

Don’t take it personally if a customer asks to return an item or for a refund—moods and minds change quickly, and a return doesn’t necessarily mean you’ve lost a customer for good.

Every support conversation with a customer provides a chance to learn from their shopping experience and make improvements to your business. For a return to be hassle-free, your requests for feedback should feel like a natural part of the process, not a hurdle you’ve included to deter people—some customers simply won’t want to share why they’re returning an item.

Every support conversation with a customer provides a chance to learn from their shopping experience and improve your business.

Use inviting and not accusatory language, and position your request for feedback as a way for your business to learn and improve. You might save the sale by fixing a customer’s issue, but if not, look for a root cause you can fix down the line, so future customers don’t return their products for similar reasons.

3. Are your packages insured?

Once a package is en route to your customer, influencing the shipping experience is mostly out of your hands, which is why insurance—designed to handle unforeseen issues like lost or delayed shipments—can be a good addition to your packages in some cases.

Whether you have insurance or not, scenarios that aren’t your fault are still your responsibility, so be prepared to offer customers whatever help you can provide to solve these issues. Most customers understand packages can randomly get lost or damaged, so how you respond matters most.

How to solve

Including a packing slip is a good way to prepare when a package gets lost due to a damaged shipping label, as the additional information helps ensure the package gets to its destination.

However, adding insurance to your packages is the best way to hedge the risk. Insurance is an extra cost you’ll have to factor into your profit margins, but insuring your shipments can provide extra peace of mind for both you and your customers.

Most shipping carriers have mail classes that include the cost of insurance in the overall shipping cost. A few examples include Priority Mail and Priority Mail Express for USPS, or Priority or Xpresspost for Canada Post.

If you’re shipping with a mail class that doesn’t include coverage, you can still add insurance to a shipment.

If you’re shipping with a mail class that doesn’t include coverage, you can still add insurance to a shipment, often for only a few dollars per $100 USD of declared value. If a package is lost, damaged, or overly delayed, you can submit a claim for approval to your insurance provider. It’ll take some time, but recovering the product and shipment cost may be worth the effort.

Whether you decide to offer insurance on all of your shipments, or to insure shipments over a certain dollar value specifically, clearly communicate your policy and any associated costs on your shipping policy page or in your FAQ.

How to support

Again, start with empathy: How do you feel when an anticipated order is lost or arrives damaged? Waiting for days or weeks only to receive something broken, or have it not show up at all, can be frustrating, especially when a customer wants to love your product, or if the order is for a special event, like a birthday or a holiday.

Start with empathy: How do you feel when an anticipated order is lost or arrives damaged?

If your packages aren’t insured, talk to your customer to get a sense of what it would take to successfully resolve their issue. In case of a lost or damaged shipment, offering a replacement or, when necessary, a full refund is common.

4. What happens if my order arrives late?

Customers expect their order on a particular day—often tracking it along the way—and you expect the carrier to deliver. However, delays can’t be completely controlled, so your next best option is to be prepared to support your customers when they happen.

How to solve

If you’re especially worried about late deliveries, you can ship with a mail class that will refund you in such cases, like Priority Mail Express through USPS.

If you cannot offer any remedies for late deliveries, it’s important to note that alongside your other shipping policies.

For example, on Midori Bikinis’ shipping page you’ll see the brand provides more information on common shipping issues, including a policy that it can’t refund or replace lost packages outside of a specific insured mail class, which is a common policy.

How to support

If you shipped using a service that includes refunds for failing to meet delivery guarantees, you may have the budget to be more flexible in what you offer your customers.

Even if the delay isn’t covered, it’s a good idea to do what you can to make up for the tardiness of the shipment, like offering a discount or gift card toward the customer’s next order.

5. Do you offer faster shipping options?

As any holiday event or shopping season draws near, customers tend to look for expedited shipping to ensure their orders will arrive in time for the big day. To meet those expectations, you can add additional shipping options—even if it means offering higher-priced alternatives. During a truly busy season, or a holiday crunch time, customers are fine with the additional cost.

How to solve

Consider adding an expedited shipping option in your shipping settings, which customers will be able to select at checkout.

You can also display all your shipping options in one place for quick reference, like on your shipping policy page. Fashion Nova lays out each available shipping method and the expected delivery time.

If you know shipping times will be a deciding factor for a customer, it’s worth highlighting the availability of your fastest shipping times. During those windows, you can turn on an announcement bar in your store’s theme, or use an announcement bar app to do the same.

How to support

Frequent questions about your shipping times indicates you’re not communicating your options clearly enough. Answering questions about available shipping times can be as simple as directing customers to your shipping policy page, or writing a saved reply to send over email.

If you’re getting questions about whether you can get an item to a customer by a specific date, let them know if you can meet their expectations. Finding a compromise may help you win the sale, but remember: to scale your shipping operations, you’ll need to rely on predictable policies.

You’ll need to rely on predictable policies to scale your shipping operations.

6. How do you handle orders that go through customs?

Shipping internationally can open your business up to new markets, but it requires understanding customs and related taxes in each country where you’ll sell.

Find out which taxes may be levied on your shipments and display those fees or processes to your customers. Since taxes and duties can change from country to country, and even from year to year, you may want to provide a clear disclaimer that you are not covering, nor are you liable for, duties and taxes that may be assessed on their order when it arrives.

How to solve

If you’re new to shipping internationally, choose a few countries to begin with and learn the process of shipping to each one. Display the countries you ship to and available shipping options on your store so customers can find the information.

You’ll also want to be clear about what responsibility you assume for taxes and duties assessed on the order. Covering your bases this way is potentially safer than laying out each process for each country. If you do see a high volume of orders from a specific country, consider providing more detail for your customers there.

How to support

Having an international audience for your products is good, so receiving a question about customs can be exciting. At the same time, you want to ensure you’re giving wholly accurate information about customs or taxes, and not accidentally misleading anyone.

If you have any doubt about your ability to ship your products to a country, or the specifics of taxes and duties, it’s best to defer to other sources.

7. Do you offer any gift options for orders?

Customers who want to gift your products will often look for that little something extra to set their purchase apart, whether that means gift wrapping or a simple gift receipt.

While offering gift options can cost time and money, you’ll be able to successfully sell to holiday shoppers in need of extras like gift wrapping—which, if complimentary, can incentivize to buy without an additional discount.

How to solve

On average, gift wrapping has a 50% profit margin per item. Questions about gift options are a strong indicator of demand, and offering the service could convert more orders and up your average order value around the holidays.

Shopify online business merchants can add a gift-wrap option to their cart page or use an app like Gift Wrap Plus.

Lastly, selling gift cards is another smart option for the holidays. You can offer gift cards on the Shopify plan and above.

How to support

When talking to customers, ask clarifying questions to determine what kind of gift experience they’re looking for. If they’re requesting gift wrap and for the product to be shipped to a different address, handling the request outside of your usual policy creates an opportunity to over-deliver. By handling one-off requests for gift options, you can test out the offer and determine if it should be made available to all of your customers.

Prepare, then iterate

At the heart of handling most common shipping questions are two key strategies: prepare, then iterate. Preparing answers and policies ahead of time, outside of the pressure of a customer issue that requires a quick reply, lets you create a baseline that fits your business, your products, and your budget.

Remember: most plans need to adjust after they come into contact with reality.

But remember, most plans need to adjust after they come into contact with reality. As you get specific customer questions, use that feedback to refine or improve existing policies. Every question is a chance to not only solve for the customer, but to learn how your policies stand up to real-life shipping situations.

Shipping costs FAQ

How do you calculate shipping for an online business?

You must determine the following factors when calculating ecommerce shipping costs: 

• How fast you’d like the package to get to the destination. 
• How valuable the package is. 
• Where the package is going. 
• How much the package weighs. 
• The physical package dimensions. 
• Extra costs for unexpected issues and fees. 

How much should I charge for shipping?

One way to know what to charge for shipping is calculating the average shipping cost per package. Add up the total cost of shipping your packages for a month. Then divide that number by the amount of packages shipped in the same time period.

How much does shipping cost?

Shipping costs are different depending on the carrier you ship with. You can use a calculator to figure out final shipping costs. Shopify Shipping you can save up to 88% with industry-leading discounts on USPS, UPS, and DHL shipping rates.