Shipping is imperative for any ecommerce business, but it shouldn’t cost you an arm and a leg to get your products to customers. Here’s ShipStation’s guide to saving money on shipping.
Making shipping more affordable can not only save your bottom line, but it can also pass savings to your customers. ShipStation has put together some strategies you can use to save money on shipping below as well as an eBook with more tips.
Which carriers have the lowest out-of-box rates?
USPS is usually the most economical option for US-based recipients—particularly for parcels weighing under 10 lbs. Parcels weighing under 1 lb are almost always going to be most affordable with USPS First Class Mail. We've broken down a few shipping configurations to show which carriers offer the lowest rates (ranked 1 through 4, with 1 being the cheapest). The following price rankings are based on rates available to you with a Stamps.com Pro Plan and the FedEx Advantage Program.
10” x 12” x 2” — 6 ounces |
Zone 1, 2 |
Zone 5 |
Zone 8 |
FedEx |
3 |
3 |
3 |
UPS |
4 |
4 |
4 |
USPS Priority Mail |
2 |
2 |
2 |
USPS First Class |
1 |
1 |
1 |
16” x 12” x 4” — 4 lbs |
Zone 1, 2 |
Zone 5 |
Zone 8 |
FedEx |
3 |
3 |
3 |
UPS |
4 |
4 |
4 |
USPS Priority Mail |
2 |
2 |
2 |
USPS First Class |
1 |
1 |
1 |
20” x 10” x 6” — 15 lbs |
Zone 1, 2 |
Zone 5 |
Zone 8 |
FedEx |
1 |
1 |
2 |
UPS |
3 |
3 |
3 |
USPS Priority Mail |
2 |
2 |
1 |
Negotiating Rates
Consolidating your shipping through a single provider is a great way to negotiate volume-based rates—particularly with UPS and FedEx. These rates frequently lower the base shipping rate per label, but they can also waive additional fees, such as the residential surcharge (which is usually close to $4 per shipment). With these negotiations, is possible to drive your UPS and FedEx carrier fees down to be comparable to USPS costs.
Delivery Speed
Best Options for 2-3 Day Shipping
2-3 day shipping is usually most affordable with USPS Priority Mail. FedEx and UPS’s respective Ground/Home services offer similar delivery times, but USPS typically offers the lowest rates. If a package weighs over 10 lbs, UPS and FedEx start offering lower rates—particularly to shipments sent to higher zones.
Best Options for Next Day Shipping
Next Day/Overnight delivery is an area where FedEx and UPS outperform USPS. With strategic hubs located throughout the world, FedEx and UPS are frequently the carriers of choice for expedited shipping. Also, FedEx and UPS guarantee delivery for specific timeframes. In contrast, if you tell a customer that USPS Priority Mail Express is going to arrive in 2 days, and it ends up taking 3, it is unlikely that you will receive financial compensation. The best services, in this case, are UPS Next Day Air Saver® and FedEx Standard Overnight®.
Package Size
The size of a parcel impacts its shipping rate since sorting facilities, delivery vehicles, and delivery persons’ messenger bags have limited space. Unfortunately, these space constraints have led to higher dimensional weight pricing through carriers. Dimensional weight occurs when large, light-weight parcels have their oversized dimensions calculated as pounds. For instance, if you ship potato chips, you could see a greatly inflated rate over smaller parcels like a can of tomatoes. One way to maintain steady shipping costs is to opt for Flat Rate packages. Sometimes these packages don’t offer the lowest rate though, so here are some alternative packaging options.
Best for Envelopes or Flats
First Class Mail envelopes and flat rate envelopes are cheapest, but if this option doesn’t work, USPS Priority Mail is the way to go. One important note to keep in mind is First Class Envelopes are not trackable.
Best for Small Packages
Generally, USPS offers the best rates for small parcels. You can usually find the lowest cost for First Class Mail for parcels weighing under 16 oz and of Priority Mail for parcels under about 12 lbs.
How does cubic pricing and dimensional weight impact rating?
Cubic Pricing
Cubic pricing is advantageous if you sell small, heavy items. The way you determine it is if a parcel is under 20 lbs and has a volume of 0.5 cubic feet or fewer (with no dimension longer than 18”). The way you determine cubic volume is with this formula:
Length x Width x Height / 1728 = Cubic Feet
Cubic pricing is broken into 5 categories (ranging from 0.1 to 0.5 cubic feet), so if you were wanting to ship individual bricks, for instance, you would be in luck!
Dimensional Weight
Dimensional weight, as mentioned above, is the inverse of cubic pricing. It is for large, lightweight parcels that raise the price of a shipment. Weight generally is the biggest factor in how rates are calculated, but space is also a precious commodity for carriers. As ecommerce continues to drive up the quantity of larger parcels being shipped, carriers raise prices to help accommodate the additional amounts of space required.
The way that Dimensional weight is calculated can be found with the formula LxWxH / divisor. The lower the divisor, the higher the cost. Because of this, USPS offers the best dimensional weight rates, as shown below.
Carrier |
Domestic Formula |
UPS |
(LxWxH)/139 |
Fedex |
(LxWxH)/139 |
USPS |
(LxWxH)/166 |
For more tips and insight into how to get carrier discounts, save on packaging costs, use more economical services, and more efficiently streamline your order fulfillment process, enter your email below to receive ShipStation’s full Cheapest Way To Ship guide:
