Calculating Shipping and Handling Fees

One of my earlier pieces of advice was that you should include all the details about shipping and handling (how much and who pays) up front in your item listing. While this is a good idea, how do you figure shipping costs before you know where the item is going?

Working with Flat Fees

The solution is easy if you're shipping something small and light. Figure the shipping costs from your location to either coast, and either use the highest cost or an average of the two costs. When the shipping is low to begin with, if you're off a dollar one way or another, it's not a big thing.

Flat fees are also easy if you're using one of the postal service's flat-rate Priority Mail packages. You can choose from three now: the long-established $4.05 flat-rate envelope and two different sizes of $8.10 flat-rate boxes. With these flat-rate packages, anything you can fit insideno matter what the weightships anywhere in the U.S. for that flat rate. This option certainly makes it easy to calculate your shipping charges.

If you're shipping a larger or heavier item, however, charging a flat rate is less feasible. That's because the rates vary significantly by distance. A ten-pound item might cost under $10 to ship in-state, but cost twice that to ship coast-to-coast. It's hard to come up with an average that doesn't either hit you hard in the pocketbook or dramatically overcharge your customer.

Working with Variable Fees via eBay's Shipping Calculator

When you're shipping larger and heavier items, your best option is to state that buyers will pay the actual shipping cost based on location, which will be calculated at the conclusion of the auction. You can make this work by using eBay's Shipping Calculator.

The Shipping Calculator, shown in Figure 17.1, is a great tool; it lets buyers enter their ZIP code on the auction listing page and then calculates the actual shipping cost, based on the shipping service you selected. (You can also choose to have the Shipping Calculator add a predetermined handling charge for each shipment, which we'll discuss in a minute.) When a buyer checks out at the end of the auction (or chooses to pay via PayPal), he or she also uses the Shipping Calculator to automatically add shipping/handling fees to the total.

Figure 17.1. Add eBay's Shipping Calculator to your item listings so buyers can automatically determine shipping and handling fees.

You activate the Shipping Calculator when you create a new item listing, by selecting Calculated from the pull-down list in the Shipping section (shown in Figure 17.2). Select or enter a package size, the estimated weight, your preferred shipping service(s), and other necessary information, and you're ready to go.

Figure 17.2. Activating eBay's Shipping Calculator from the Create Your Listing page.

Since the Shipping Calculator can be added to your item listings free of charge, there's no reason not to use itespecially because it greatly simplifies the task of calculating exact shipping charges to your customers.

Determining the Handling Charge

Aside from the pure shipping costs, you should consider adding a handling charge to the shipping fees your customers pay. After all, you need to be sure that you're compensated for any special materials you have to purchase to package the itemlabels, boxes, Styrofoam peanuts, and so forth. That doesn't mean you charge one buyer for an entire roll of tape, but maybe you add a few pennies to your shipping charge for these sorts of packaging consumables. And if you have to purchase a special box or envelope to ship an item, you should definitely include that cost in your shipping charge. (This argues for planning your shipping before placing your item listingwhich is always a good idea.)

Note

Some end-of-auction checkout tools automatically combine multiple auctions for a single shipping fee. Others don't, which means you might have to manually manipulate these fees to your customers.

So you should have no compunction against "padding" your shipping fees with an additional handling charge. In fact, eBay's Shipping Calculator lets you add a separate handling charge to its calculations. It's an accepted part of doing business online.

Combining Items for Shipping

If you have multiple items for sale, there is every possibility that a single buyer will purchase more than one item. If that happens, you don't always need to pack two or more separate boxes for that buyer; you can often pack all the items purchased in a single box, which will reduce shipping costs. You should pass on that savings to your customer, in the form of a combined ship-ping/handling fee for all items purchased. If you're inflexible in adjusting your shipping/handling for multiple purchases, you're ripping people offand will lose customers for it.