Understanding shipping rates (2024)

Shipping rates are what you charge your customer in addition to the cost of the products that they order. The cost of any shipping rates are added to a customer's order at checkout.

You can set up one or more shipping rates for your customers to choose from.

When you create shipping rates, you can also specify any restrictions or rules around which shipping methods are available based on the contents of the customer's cart.

On this page

  • Flat shipping rates
  • Free shipping rates
  • Calculated shipping rates
  • Local delivery method rates
  • Customer experience choosing shipping rates

Flat shipping rates

Flat shipping rates are specific shipping amounts that you charge a customer based on their order.

For example, if you want to charge $5 USD for shipping each time a customer places an order, then you would set up a $5 USD flat shipping rate.

The benefit to flat shipping rates is that you have control over precisely what a customer is charged at checkout.

General rates

General rates provide a flat rate shipping cost regardless of what is in the cart.

For example, if you want customers to be able to choose between regular shipping costing $5 USD or expedited shipping costing $15, then you would set up two general flat rates, one for each option.

These two rates then display as options in your checkout for any customer's order.

Price-based rates

Price-based rates let you set minimum and maximum cart values for your flat shipping rates.

For example, suppose that you want to charge different rates for orders below and over $50 USD. Using priced-based rates, you can set a flat shipping rate of $4 USD for orders under $50 USD, and a flat shipping rate of $10 USD for orders over $50 USD.

Using the example above, a customer with a cart valued at $35 USD would have only the $4 USD shipping option displayed at checkout.

Review the following table that displays example price-based rates (all prices are in USD):

Example price-based rates
Order valueShipping rate price
$0 USD - $100.00 USD$24.99 USD
$100.01 USD - $200.00 USD$9.99 USD
$200.01 USD and above$0 USD (free)

Weight-based rates

Weight-based rates let you set the minimum and maximum weights that qualify an order for your flat shipping rates.

For example, suppose that you want to charge different rates for orders below and over 5 kg. Using weight-based rates, you can set a flat shipping rate of $7 USD for orders under 5 kg, and a flat shipping rate of $15 USD for orders over 5 kg. Using this example, a customer with a cart that has a combined weight of 7 kg gets only the $15 USD shipping option displayed at checkout.

If an order doesn't match any shipping rates defined in Settings > Shipping and Delivery, then the order is assigned to the next higher available weight based shipping rate. For example, if there is a 2 kg order and a shipping rate only for 4 kg orders, then the customer is displayed the 4 kg shipping rate at checkout instead of an error message.

Review the following table that displays example weight-based rates (all prices are in USD):

Example weight-based rates
Order item weightShipping rate price
0 lb - 0.99 lb$4.99 USD
1 lb - 4.99 lb$9.99 USD
5 lb - 9.99 lb$19.99 USD

Free shipping rates

Any flat shipping rate can be made into a free shipping rate by setting the shipping cost to $0 USD. For example, if you want to offer free shipping on all orders, then you can create a general flat shipping rate with a cost of $0 USD.

Instead, if you wanted to offer free shipping on orders over $100, then set up a priced-based flat rate of $0 USD for orders over $100.

Calculated shipping rates

Calculated shipping rates are shipping costs that are provided by any shipping carriers or apps that you add to your store.

When a customer reaches checkout, their cart information is sent to the shipping carrier or app, and they return what you should charge for shipping.

The benefit of carrier-calculated shipping rates is that you can pass on the exact cost of shipping an order directly to the customer.

Calculated shipping rates from shipping carriers

Depending on your store's Shopify subscription plan and location, there are certain shipping carriers that you might be able to add directly to your shipping settings.

Shipping carriers can use any of the following factors when determining how much to charge for shipping:

  • shipping origin
  • shipping destination
  • weight of the shipment
  • value of the shipment
  • dimensions of the shipment box
  • dimensional weight
  • requested speed of delivery

For example, suppose that a customer from Washington D.C., United States reaches the checkout with a 1 kg order. Your store is located in Ottawa, Canada and your default box size is 5" x 7" x 7" weighing 0.375 kg. If you connect your Shopify account with Canada Post, then Canada Post calculates the possible shipping options for your customer based on the order criteria, and provides them at checkout for the customer to choose from.

Calculated shipping rates from apps

Apps can also provide calculated rates when the carrier that you ship through uses an app to integrate with Shopify, or you need a more advanced shipping setup.

To view all available shipping apps, visit the Shopify App Store.

Local delivery method rates

You can set up pickup in store and local delivery options for customers who are close to your business.

Local delivery

If your business offers delivery, then you can create a local delivery method for your customers to choose at checkout. You can set a delivery fee and minimum order amount.

Specify the availability of your delivery by listing postal codes or choosing a radius around your business location. If a customer's address has a listed postal code or is within the radius that you set, then they will have the option to choose local delivery as a shipping option at checkout.

For more information, refer to Setting up local delivery for online orders.

Pickup in store

You can give your customers the option to come to your business to pick up their order. This is a good way to let customers save on shipping costs, and lets you create a more branded experience for your customers. You can provide pickup instructions and let customers know when they can expect their order to be available.

For more information, refer to Setting up pickup for online orders.

Customer experience choosing shipping rates

The shipping settings that you use affect what displays to your customers at checkout.

After you've set up your shipping rates, you can place a test order using your own checkout and view the options that your customers have to make sure that your rates are appearing correctly.

As soon as your customers reach checkout and enter a shipping address, their shipping methods are displayed. Although you can create many shipping options, each customer is offered only those applicable to their order. The cheapest option displays as the default.

If your customer leaves the checkout page to change the contents of their order, then their shipping rates might change. Most shipping rates are calculated based on an order's weight, so any significant changes to an order's contents can make the original shipping rate inaccurate. When your customer returns to the checkout process after changing their order, they're redirected back to the same step of the checkout process. They won't receive the new, recalculated shipping rate until they're ready to complete their purchase.

Customers who enter a shipping address in a region that isn't included in your shipping zones receive a notice that there is no shipping rate available for their region:

Understanding shipping rates (1)

Checking out with PayPal Express

If your customers are checking out by using PayPal Express, then they're first taken to the PayPal page to enter their credit card information and billing address. After this step, they’re offered the available shipping methods.

You might want to inform your customers that they will encounter this intermediate step if they’re using PayPal Express. An easy way to do this is to create an information page and link it to the footer of your store.

Understanding shipping rates (2024)

FAQs

How do you calculate shipping costs? ›

A: Consider the following elements to calculate shipping costs:
  1. Origin and destination of shipping.
  2. Package weight.
  3. Package dimensions.
  4. Shipping duration.
  5. Insurance for shipping.
  6. Charges associated with shipping.
  7. Charges related to parcel handling.
  8. Duties and taxes.
Mar 28, 2024

How does shipping rate work? ›

Package dimensions

DIM weight is calculated by multiplying the length, width, and height of the package or box size, then dividing by a standard DIM divisor. Shipping carriers like USPS, FedEx, and UPS calculate shipping charges based on whichever is greater: the actual weight of the package or its DIM weight.

How do you analyze shipping costs? ›

Sample shipping cost analysis

These items include things like shipping from and shipping to zip codes, dimensions of the items shipped (length, width, and height), the item's weight, any additional surcharges that were paid, packaging type, and the total cost to ship each item.

Is it cheaper to send a 20 lb box UPS or USPS? ›

Generally, UPS works out cheaper for shipping large items, while USPS is cheaper for sending small items. If you're looking for a price for ground shipping in the US and your parcel is no more than 66lbs, a good choice is UPS Ground.

How to calculate cost per delivery? ›

Average shipment cost = packaging cost + transport cost + cost of cargo insurance + returns rate + cost of preparing the order. To set a delivery price, you must also examine costs related to transportation, storage, handling and customs fees, as well as company financial goals and customer preferences.

What is a good standard shipping rate? ›

The cheapest way to ship a small package
ProviderServiceRate
USPSPriority Mail$10.40
UPSGround$14.25
FedExGround$15.02
DHLExpress Domestic$72.18
1 more row

What is the calculated shipping rule? ›

Calculated shipping rules

Automatically combine the weights of the items in one package and subtract a weight amount (in ounces). For example, if a buyer purchases 3 items that weigh 4 lb each, you can set up a rule that combines the items in one 12 lb package, and automatically deducts 16 oz from the total weight.

What is a good percentage of shipping costs? ›

Retailers state that shipping costs typically range from 5 to 20 percent of their total revenue, so any free shipping offer forces them to absorb an extra expense.

How do you price shipping and handling? ›

What is the shipping cost formula? Shipping and handling costs = Packaging costs (P) + Shipping costs (S) + Handling costs (H), or P + S + H. There are three variables in the formula: P = Packaging costs, or the cost of the envelope or box and any packing materials.

How do you account for shipping costs? ›

A shipping cost is an expense known as “freight out.” Freight out is a type of cost of goods sold (COGS) expense, not an operating expense. So, record shipping costs under the COGS section on your income statement. Expenses are increased by debits and decreased by credits.

What is the most cost effective shipping method? ›

First Class Mail envelopes, flat rate envelopes, and USPS Priority Mail offer the lowest rates for small packages. Another option is to use cubic pricing.

What is the formula for shipping costs? ›

How is Shipping Cost Calculated? A simple formula exists for determining the shipping cost of your items: Total shipping cost / Average inventory value = shipping cost per item.

How is freight shipping calculated? ›

In general, as you estimate freight costs, the higher the density of your shipment, the less it costs to ship. The dimensions and weight of your shipment are used to calculate density. Density is the relationship between how much room an item takes up and its weight.

How do you understand freight rates? ›

Freight rates are calculated based on many factors not limited to economic demand, fleet capacity, fuel prices, weight, size, distance, and the type of goods being shipped. Rates are negotiated and agreed upon by the shipper and carrier either on a contract or on-the-spot basis.

What is the cost formula for shipping expenses? ›

How is Shipping Cost Calculated? A simple formula exists for determining the shipping cost of your items: Total shipping cost / Average inventory value = shipping cost per item.

Does the USPS charge by weight or size? ›

For First-Class Mail, shape and weight will determine the price. For Priority Mail, the price is a combination of weight, size, and how far the mailpiece is traveling. Priority Mail pieces that exceed one cubic foot, are subject to "dimensional weight pricing".

Is shipping calculated by weight or distance? ›

Shipping rates are calculated based on the weight of the item and the distance it has to travel (how many shipping zones it goes through).

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