SolveYourProblem
Article Series:
Niche Marketing Opportunities
Price
Your Product Shipping and Handling
(Physical Goods)
by Jeff Cohen
If you're running a business that sells physical
goods and products, you will frequently need to dispatch
your products all over the country - perhaps even all over
the world. When you do this, you might pack the item yourself, or you
might pay someone to do it. However you handle it, shipping
and handling is an important aspect of your business, and the
safety of the items you post rests partly on your shoulders,
as badly packed items will often get damaged in transit.
Your
shipping and handling charges are a determining factor
in how competitive you will be in a niche market. Many established
companies are well known for their efficiency in dispatching
the product - customers trust them for their safe prompt delivery.
Before you can emulate them, you need to come up with a fair
pricing structure for shipping and handling as this is an additional
cost paid by your customers. The costs of shipping in bulk
are often cheaper than for a single item and you should consider
giving your customers discounts for volume.
How do you calculate shipping and handling charges for your
product? It's relatively easy, if you know the basics. There
are two components in the price:
1)
The handling cost which includes packing material, labor,
storage and other related costs. While this
cost is pretty
easy to calculate and depends only on you, the most common
mistake is to use the lowest price possible for packaging materials
in the shipping calculation. The better way is to find an average
cost for packaging materials and then source the cheapest.
At least this way you still have some room to "sharpen
your pencil" if your shipping quote is too high.
2)
The shipping cost which is the charge for postage, freight
or courier charges. These costs are not so straight forward
and you need to research courier and freight charges to many
destinations around the world. Bear in mind that not all shipping
charges are fixed, and with a little effort you can easily
negotiate an agreement with your shipping company.
Shipping
and freight companies usually charge based on the weight
and volume of items, the distance they are going to
travel, and how quickly you want them to get there. Large volume
or weight deliveries carry a premium price tag, while smaller
and lighter ones cost less. If the destination is within your
country, the shipping charges will be rather small compared
to sending packages abroad. If you need urgent goods to be
delivered quickly then you will need to pay higher 'priority'
charges, whereas slow, 'non-priority' delivery costs much less.
When calculating shipping costs, don't
calculate the cost of shipping to each country in the world, break it down into
regions or by continent. If you are shipping small items like
CD's use one shipping cost for local deliveries and cost for
international deliveries. Find the most expensive shipping
cost you are likely to incur and use that for all countries.
When your customer purchases a product, they will be charges
the cost price for the product and the shipping and handling
costs applicable for the delivery destination will be added
at the checkout. A total is calculated and then charged to
your customer at the end of the transaction.
You may want to consider offering customers a delivery
priority for their shipment. For example:
Option
1. Standard shipping within 3 to 5 days (cheapest).
Option
2. Express 2-day shipping (average cost).
Option
3. Guaranteed Next Day 1-day shipping (most expensive).
Consider
giving discounts on bulk orders. Customers will often
insist on insurance for bulk orders and costly items and you
should consider their request; not only does it makes them
more comfortable, it saves you a big PR headache if the order
goes missing. On all shipments include a clearly explained
shipping, handling and return policy.
Always
take care to prepare the proper documentation to suit the
insurance, tax and customs regulations in force in your
own country and in the destination country. If you are shipping
to another country, make sure your product is not prohibited.
If you sign up with a trustworthy shipping agent or courier
most of the documentation will be handled by them, giving you
peace of mind that your items will be delivered safely and
quickly. # # # # # SolveYourProblem.com : 2007
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