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Reducing Shipping Costs: Save Money on Free Shipping

by C Douglass on October 26, 2009

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In this series of articles we will discuss a variety of ways to reduce shipping costs. First we will look at ways to save money while offering free shipping to your customers.

1) Using Strategic Pricing to Save on Free Shipping Offers

Offering free shipping is a great way to attract customers. Unfortunately, the shipping costs you incur will add up quickly can cut deeply into profits. One idea to save on the amount of orders that you pay to ship is to plan the pricing in a way that entices them to upgrade. This is based on the number of days each option will take to arrive.

Here is an example strategy:

Free Shipping – 7 to 10 Business Days     $0
Standard Shipping – 5 to 7 Business Days     $4
Priority Shipping – 3 to 5 Business Days     $7

In this case a certain percentage of your customers may feel compelled to upgrade to Standard or Priority Shipping. Consider offering Standard at a low enough rate that the customer will still feel they are getting a bargain. For instance, if they pay $4 to ship a package and it costs you $6 to ship you were still able to mention Free Shipping as a way to get them in the door and the package cost you $2 to ship instead of $6. As always, you will want to tweak the prices and offerings in a way that works for you.

2) Free Shipping Over $_

Another tip for saving on free shipping is to only offer it over a certain order amount. For example, ‘Free Shipping of $50’. This can increase your ‘average order value’ over time and in turn make offering free shipping more viable.

Next Article – Shipping Software

In our next article we will look at software that you can use to find the lowest rates for any package and make shipping more efficient in general.

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Please leave a comment if you have any particular shipping questions or want to add a money saving ideas of your own.

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    • http://www.stufftoshop.com/ joy

      I am based in the Philippines and the UPS Online Tool is of no use for me since if the item is not located in U.S., my only option is either to offer free shipping or flat rate. I’ve asked Ebay already about it and I was told that I was right on this matter since Ebay is a U.S. based company. So I was advised that I should just contact my shipping company and ask them to calculate shipping cost for each country of destination. That way, I can control the rates by inputting the exact figure in my checkout system. But it would be quite laborious doing that if say you have 100 different items of different weights.And I will have to ask my shipping company to compute shipping cost of each item for every country should I decide to ship worldwide. I am here because I have been looking for softwares which could help me on this. I wonder whether Network Solutions has solution for this.

      Great blog btw and very informative.