Flat Shipping Rates That Lose Money

One price for every box

A flat shipping rate is the easiest thing to put on a small online shop. One number, the same for every order, explained in a single line.

It is usually set once, at launch, from the cost of sending a typical order to a typical address. Often that address is a city a few hours away.

Carriers do not charge that way. They charge by weight, by box size and by distance, with extra for remote addresses and fuel surcharges on top.

So the flat rate is right for some orders and wrong for others, and the wrong ones are the orders nobody checks.

Where a flat rate goes wrong

• Heavy orders, where the weight costs more than the rate covers.
• Distant addresses, where the same box costs far more to send.
• Large, light items, charged by box size rather than weight.
• Remote and rural addresses, which carry surcharges of their own.
• Big orders that need a second box.
• Packing materials, which no rate was set to include.

The third is the one that surprises people. Carriers bill a large, light box as if it were heavier, so a cushion can cost more to send than a book.

Find out what shipping actually costs

The check takes an afternoon. Take the last few months of orders and match each one to its charge on the carrier's invoice or account statement.

For each order, note the weight, the destination province, what the customer paid for shipping and what you paid.

Sort by the difference. The orders at the bottom of the list are the ones you paid to sell.

Then look for the pattern. It is almost always weight, distance or both, and it often clusters in one season or one product.

Zones, weight bands or a threshold

There are three common fixes, and most shops end up combining two of them.

Zones charge by where the order goes: one rate for your own province, another for the rest of the west, another further east, and a quote for the territories.

Weight bands charge by how heavy the order is, which suits shops where order sizes vary. Most shop platforms can do zones, weights or both, sometimes with an add-on.

A free shipping threshold covers shipping above a set order value, chosen so that the margin on such an order pays for the box.

Live rates from a carrier account, calculated at checkout, are the most accurate option and the least predictable for the customer.

Weights belong in the catalogue

Every method except the flat rate depends on product weights, and many shops never filled them in.

Weigh each product as it ships, in its packaging, and enter that figure rather than the weight printed on the label.

Then account for the box. A calculation that ignores the carton and the padding comes up short on every order.

A worked example

A family garlic farm in the Interior sells online: seed garlic in August and September, when gardeners order bulbs for fall planting, and garlic for the kitchen through the winter.

The shop charged one flat rate for shipping anywhere in Canada. It had been set from the cost of a small box to the Lower Mainland.

Most orders were a few heads for a backyard bed, and the rate covered them. But each season a handful of market gardeners ordered seed garlic by the kilogram, some of them on the Prairies and in Atlantic Canada.

Those boxes cost several times the flat rate to send. The owner only found out when she matched a season's carrier invoices against the orders.

The fix was three zones and two weight bands, with a real packed weight entered for every variety, and a line on each seed garlic page explaining how shipping is worked out.

The small orders still pay what they always did. The large ones now pay what they cost.

Explain the rate before the cart

Any rate that varies has to be visible early. Met for the first time at checkout, it reads as a surprise, and surprises at checkout end in abandoned carts.

Put a short shipping table on its own page and link to it from every product page and the cart. Name zones by province, in plain words, not by carrier codes.

If there is a threshold, say so near the top of the site, and show in the cart how far the order is from it.

Heavy items and the threshold trap

A threshold based on order value has a weak spot: heavy, inexpensive products. A cart full of them can clear the threshold and cost more to send than it earns.

Exclude the heaviest products from free shipping, or limit it to nearer zones, and say so on those product pages.

One clear exception is better than a threshold that loses money on the very orders it was meant to encourage.

Rates change, so check yearly

Carrier prices and fuel surcharges change, and a rate set three years ago was set against old prices.

Put the comparison in the calendar once a year, before your busiest season. It is the same afternoon's work each time, and it gets quicker once the weights are in.

The counter-case

A flat rate is fine when products are similar in weight and customers are mostly in one region. A shop selling cards or small accessories may never need more.

It can also be a deliberate choice: a business may prefer to absorb some losses rather than show customers a table, as long as it knows the size of those losses.

And a very new shop has no invoices to check yet. Starting flat and reviewing after the first season is reasonable.

Once orders vary, though, check what shipping really costs, charge by zone, weight or threshold, and explain the rates before checkout.

Before the busiest season

1. Export last season's orders with destinations.
2. Match each one to the carrier's charge.
3. Sort by the difference to find the losses.
4. Enter real packed weights for every product.
5. Set zones or weight bands that match costs.
6. Exclude heavy items from any free threshold.
7. Publish a plain shipping table linked from products.

Step four is the one the others depend on. Zones, bands and live rates all calculate from the weights in the shop, and a missing weight is a guess on every order.

Telling customers about a rule before the checkout surprises them works the same way as minimum orders and how to show them.

Frequently asked questions

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