If you run a small business based on delivering products to customers, you have to always be aware shipping costs. Here’s how you can lower the cost of shipping goods to your customers.
For a small business owner, shipping costs could be one of the biggest expenses you have to deal with.
In the world of eBay and Amazon where shipping is often free, small businesses have to keep their shipping costs down in order to attract their customers.
Here are a few ways that you can save on the cost of shipping for your small business.
Negotiate With More Than One Carrier
All shipping companies charge on pricing schedules. These schedules are based on volume. The more you ship, the less you spend.
But small businesses don’t realize how much power they have to negotiate. If you ship a lot of packages, compare prices between companies. You might be able to persuade carriers to charge you a smaller rate.
If FedEx knows that the USPS is trying to get your business, you can negotiate.
Get Suppliers to Ship With Your Account Number
If you can, try to persuade the companies who supply you to ship your products using your account number.
This can be beneficial for two reasons.
One, it can drive down your shipping costs by increasing your volume. But also, it prevents your suppliers from padding their prices.
Use Carrier Boxes
Each carrier has their own set dimension requirements for their boxes. If you use your own boxes, you might face additional fees if those boxes exceed those limits.
Use the packaging that each carrier provides to bring your costs down.
While regional carriers might have a more limited network for delivery, but they often offer the same services as FedEx or UPS. They just offer those services at a reduced cost.
You can save on US Postal Service costs by paying for your shipping online. You can save up to 60% on express mail services by ordering in this way.
You also get free pick-up, priority mail delivery confirmation, and shipping supplies when you pay online.
Prepaid shipping offers up to a 20% discount rate. In order to use this method of shipping, you have to buy a certain amount of shipping labels up front. Then you stick them on your packages as you need to.
This works best when you know you’ll be sending out packages that all weigh the same, allowing you to know how much your shipping costs will be.
Third Party Insurance
Carrier services themselves charge around 80 cents for every $100 of insurance you need. But there is another option.
Third-party insurers, like Parcel Insurance Plan and U-PIC Shipping Insurance, only charge about 45 cents. It may seem small, but these savings quickly add up, especially if you ship a lot of expensive items.
Factor All Shipping Into Prices
Carriers can have over 75 special charges, like fuel and signature charges. Make sure you include all of these costs in the bill for your customer if they pay for shipping. This ensures that you won’t wind up paying for those out of your own pocket.
Hybrid services have extra restrictions, like volume, weight, and size, hybrid services can cost up to half as much as a standard option.
These services pick up your packages from you personally and ship them from the office closest to the destination of the packages.
This option is lower in cost, but also takes longer. Remember to consider this and alert any customers to a change in their delivery experience.
Find out if your association has a partnership with a carrier. These partnerships can offer special discounts.
Depending on the size of your association, you might be able to get up to half off of certain services through the major carriers.
Use a Postage Meter
A Postage Meter Machine is a portable machine with a scale that weighs packages and lets you know what the exact charge will be for shipping. It then prints out the label for you.
These systems totally eliminate the need for mailers to guess a package weight and add additional postage.
This option also adds the convenience of having to wait in line. It can save you up to 20% on shipping costs yearly.
These meters can even be leased for a relatively low cost.
Consolidate When Possible
If your business sends very large amounts of mail, between 150 and 20,000 pounds, consider working with a freight service that consolidates shipments with other companies to create one full truckload.
Less than truckload rates (or LTL) are usually a lot higher than the rates for a full truckload. But if a small business has a full truckload, they save time for the carrier and money for themselves.
You could also ask your carrier to keep a scorecard to track service and cost. You can ask them to track pickup, delivery, response to customer service questions, access to online data, the accuracy of that data, whether or not they meet their pickup or delivery times, and other things.
When you are charged by a carrier, that charge usually takes baseline weight and distance into consideration, but also adds a service level like overnight or speedy shipping. There are non-essential fees added as well, like special handling or time-specific deliveries.
You can work with your carrier to figure out issues in cost performance.
Get input from your customers as well. The data given to you by the carrier is biased for them, but if you find out how your customers feel about your shipping services provided, you have a clearer picture.
Good shipping practices result in low fees and happy customers.
Lower Cost of Shipping
Running a small business is already difficult enough. It becomes even more difficult when you have to raise your prices to accommodate for ever-rising cost of shipping. But if you follow these steps, you can make sure that you’re getting the best price for yourself and your customers.
For more advice for your small business, explore our blog!