It’s almost holiday time again and small businesses will be fighting for space among the shipping giants like Amazon. Fast and free shipping can be appealing, but here is the breakdown of why I don’t offer free shipping as a small business. Scroll through the visuals above or read on below:
Free Shipping is Not Free
Businesses that offer free shipping are actually rolling that price into the product price.
Here’s how it would look in my business. . .
I live in NY’s Southern Tier
Shipping ONE Mug Costs: $9 to New York City $15 to California
Some strategies suggest increasing prices by the average shipping cost, but if I make more West Coast sales than East Coast sales, I lose money.
Shipping TWO Mugs Costs: $10 to New York City $20 to California
Notice how shipping prices do not double, but they do increase more for the West Coast than the East Coast.
Here’s what it would mean for customers. . .
My Basic Mug Price is $30
I have to assume that every mug is being sold individually, so I would add the average of shipping one mug: $12
A New York City Customer Pays:
$39 for one mug with paid shipping OR $42 for one mug with “free” shipping
$70 for two mugs with paid shipping OR $84 for two mugs with “free” shipping
$102 for three mugs with paid shipping OR $126 for three mugs with “free shipping
A California Customer Pays:
$45 for one mug with paid shipping OR $42 for one mug with “free” shipping
$80 for two mugs with paid shipping OR $84 for two mugs with “free” shipping
$117 for three mugs with paid shipping OR $126 for three mugs with “free shipping
The customer in California makes out slightly better for one mug, but after two mugs, they are also overpaying.
Prices get even more complicated for small items (like spoon rests) that ship on their own for $5, but naturally ship free with larger items if they don’t push the package into the next weight bracket. But as a business, I have to assume every item is shipping alone, which would mean every spoon rest would be $5 more.
Raising prices online also means raising prices in stores and at shows. It is important that your prices are consistent everywhere a customer shops. No one wants to see a mug at a show and then go online and find that it is $12 more than at the show. But, shipping is a service, and that means paying for the service.
I would rather fairly charge shipping based on weight and location than raise prices across the board. I’m not here to make profit on shipping. Keeping shipping separate protects my business AND my customers from over-paying.
I also refund shipping overages in cases of overestimation.
Hopefully this post gives both customers and other small businesses a look behind my decision to keep my product prices transparent and to charge shipping on a weight and distance basis.