Having fantastic products is not enough to guarantee your business’s success — you must also find a way to deliver them to your customers’ doorsteps affordably, safely, and quickly.
Shipping is a critical yet often complex part of your business strategy. Here’s what you need to know about selecting effective shipping pricing strategies to help increase your bottom line while keeping customers happy.
Some standard components of shipping costs include:
An accurate cost assessment of shipping expenses is key to developing an effective pricing strategy that prevents you from undercutting your profits or overcharging customers. Regularly tracking and analyzing these numbers can also highlight opportunities for cost-saving and efficiency improvements.
One way to determine your pricing strategy? Conduct a competitive analysis.
By benchmarking your shipping costs against your competitors, you can pinpoint areas to streamline or enhance your shipping offerings.
Use these tips to conduct a competitive shipping analysis:
Do your customers prefer cheap yet slow shipping or pricey and fast shipping? Knowing your customer expectations can shape your shipping strategies.
Today's consumers typically look at:
Research has also found that nearly 50% of American consumers are willing to meet a minimum purchase value to unlock free shipping, highlighting how meeting customer delivery expectations can directly impact sales.1
So how should you set your pricing? Consider tiered pricing strategies, which adjust shipping charges based on:
Shipping costs are never set in stone – negotiating with carriers can significantly reduce rates. You can then pass on these savings to customers or boost your profits.
Use these tips to negotiate shipping rates effectively:
Shipping software and tools automate processes like label creation and rate comparison, saving valuable time, reducing human error, and uncovering better deals.
Some popular options for small businesses include:
Given its direct impact on your business’s bottom line and customer satisfaction, shipping shouldn’t be an afterthought. By understanding customer preferences, rate negotiation, and the various tools to employ, you can select the best shipping strategy.
Want more shipping best practices that’ll help you reduce abandoned carts and delight your customers? Check out these PayPal shipping articles.
In partnership with three expert business owners, the PayPal Bootcamp includes practical checklists and a short video loaded with tips to help take your business to the next level.