If you start an online shop, you will sooner or later come to the question of how much you should charge for shipping orders. We would like to help you with that.

At the beginning, it is necessary to clarify some basic concepts:

These two items appear to be related to the same service, but in fact almost all webshippers handle them completely separately. We'll see why in a moment.

Two main factors affect shipping rates: how much it costs the online store to fulfil the order (shipping costs, warehouse rental, labour costs, etc...) and how much the shipping rates are compared to other online stores with a similar profile, i.e. competitors.

Carriers typically charge their customers by weight for the delivery of the parcel to the webshop, so it would seem logical that the webshop should also charge its customers by weight.

However, this is not typically the case, because instead of weight-based fees, you will find webshops that use a uniform rate, independent of weight, or perhaps a range of delivery charges based on the value of the order. Sometimes operators use different tactics, but which is the right one?

Setting delivery charges is now less dependent on the costs involved, there is no perfect method, but rather marketing considerations are taken into account. It depends on the business model, the nature of the product, the target group of the online store, the competition and the characteristics of the market.

With few exceptions, courier companies base their delivery charges on weight: the heavier the parcel, the higher the price. Many years ago, it was common practice for online shops to base their delivery charges on weight, but this is no longer the case, because:

The last argument may result in regular purchase cancelling, i.e. the visitor changes one's mind at the last moment and does not finalise the order.

In many cases, online shoppers start browsing websites by understanding the additional costs. If the calculation of the delivery charge requires a lot of effort or research, they are discouraged and often click on one of the similar online shop sites. If they are not informed at the outset, they are only confronted with the delivery charge when they check out, and if they do not find it realistic or acceptable, they leave the site immediately.

This is why online stores are increasingly striving for simplicity: make the delivery charge an easy to calculate and predictable item!

Logistics-related costs are made up of many items, some of which are not directly related to the order. E.g. warehousing, order processing, delivery, packaging materials, packaging supplies, etc. Some fixed costs cannot be allocated in the same amount to a single order, as they are a constant number independent of orders, while the volume of orders varies from month to month. Therefore, if you want to pass on the full cost of logistics, you would have to adjust the delivery charges from month to month. Moreover, if you add up all the logistics costs and divide them by orders, you would probably end up with a high amount that would not be competitive in the market and therefore not accepted by your potential customers.

Webshippy, on the other hand, makes life easier for webshop owners by calculating its favourable logistics costs associated with their orders on a per-package basis. This means, that there are no fixed fees such as subscription fees, monthly fees, system usage fees or system login fees. The parcel handling charge covers the processing, bundling, packing and dispatch of the order, and the delivery fee and the delivery charge which are both determined on a per-package basis.

Optional extra services such as extended parcel processing (which means orders received before 5pm are dispatched the same day), the option to pay by credit card at the courier or the Replacement Package service are also charged on a per-package basis. This way you can track your costs in Webshippy by order and by parcel and save them in an Excel spreadsheet at any time.

As we mentioned earlier, with setting the consumer price of products, in most cases, the setting of the delivery charge is now more of a marketing strategy than a cost, as the customer's decision which can be significantly influenced by the price they can get for their order.

This is why shipping charges based on weight are no longer common, but rather an online store classifies logistics costs as part of the cost of operation - which is covered by the margin, in addition to the shipping charge. This explains why some online shops offer free delivery of orders above a certain value (e.g. "This week, free delivery for orders over HUF 20 000").

Of course, there are several places where the cost of delivering small parcels and larger household appliances or the different delivery methods (home delivery, parcel machines, etc.) differ, but almost everywhere nowadays, efforts are made to keep delivery charges simple and understandable. Therefore (if possible) you should have more than one delivery method, but preferably either have one price for each, or charge a sliding scale depending on the value of the order (not the weight of the package).

To determine your delivery charge, first look at what your competitors are charging, then look at what your costs are closely related to the orders (based on their weight and size). To do this, you can export a very detailed spreadsheet in Webshippy's system, which will show you all the costs charged for each order in detail.

Determine an amount that is high enough to cover as much of your logistics costs as possible, but low enough to be competitive and not scare away visitors.

Last but not least, the delivery charge should be attractive, as the psychology has proven that prices ending in 90 work better. Thus, a delivery charge of 1190.- or 1490.- will be more attractive than one of 1200.- or 1500.-. But if you can cross the psychological barrier, a delivery charge of 990 HUF would surely please all your customers.

Just starting your online store and don't have any historical data? Then we recommend that you think about your likely costs based on the product range and the likely orders placed by your target group, and then determine your delivery charges based on these, and compare them periodically (e.g. quarterly) with the costs based on the actual orders received. If the difference is significant, think about what needs to change.

At regular intervals, you should compare your costs with your suppliers' prices.