Shipping gets complicated. It’s likely the reason why you’re
here to begin with. Without a doubt, it’s a critical part of
selling online, and it can make or break a sale. It’s one of
an e-retailer’s largest expenses, it’s the final part of the
purchase process — it’s how an order gets to the customer’s
In this guide, we’ll cover the single most important part of
delivering orders that determines how much you will be
paying: shipping rates.
A shipping rate, sometimes referred to as postage, is the cost a
shipping carrier will charge you to deliver a product to the
customer, and they’re a major expense when selling online that
takes a bite out of every sale you make.
A shipping rate is determined by four factors — the weight (or
dimensional weight) of an order, the distance it must travel to
reach the customer, the shipping method used to get it there,
and additional fees that a shipping carrier might charge to ship
Whether it’s in ounces, pounds, grams, or kilograms, the actual
weight of an order has a heavy impact on shipping rates. Many
e-retailers sell and package products deliberately with weight
in mind, as even a couple of ounces can significantly affect
your bottom line when you’re shipping out hundreds of orders.
Your product and your packaging will sum up the weight of a
shipment. But that’s actual weight. In some instances, a
shipping carrier will choose to charge a rate based on what’s
called dimensional weight, a slightly more complicated way of
weight measurement that’s centered on space.
In the past, shipping rates always focused on actual
weight — purely ounces, pounds, grams, or kilograms. But
in recent years following the surge in online orders,
the implementation of dimensional weighting has
Think of a children’s foam playhouse or an aluminum
birdcage. Although both are lightweight, they’re also
spacious. If a shipping rate is calculated based on
actual weight, the cost to ship such lightweight, large
products is low. But they take up a considerable amount
of space, space that a carrier could use for more
valuable orders, whether it’s several lightweight orders
or a single heavy one.
Dimensional weight exists for one reason: shippers want
to charge for space. Only so many orders can fit in a
vehicle or plane, and every centimeter of space is money
a shipping carrier could be making. Here’s how it’s
Dimensional Weight = (Length x Width x Height) /
You can use inches or centimeters to calculate the
volume of a shipment, and whatever unit of measurement
is used will impact the divisor, which may also be
referred to as a density factor or volumetric equivalent
depending on the shipping carrier.
Most carriers will use inches to calculate the volume of
an order, and they’ll base their divisors in inches as
well — 139, 166, and 194 are some common ones. But
volumes calculated in centimeters will naturally have
larger divisors — those divisors mentioned earlier end
up being 5,000, 6,000, and 7,000 respectively when using
So long as the measurements you’re using — centimeters
or inches — line up between your volume and divisor,
you’ll get the same dimensional weight either way.
When it’s time to determine a shipping rate, all
shipping carriers will select whichever weight,
actual or dimensional, is larger.
As an example, let’s say you’re shipping out an
order packaged in a box with the dimensions 12" x
12" x 12". Multiply that length, width, and height,
and you have a volume of 1,728 cubic inches. Then
divide by the divisor — we’ll use 139 in this case —
to get a dimensional weight of 12.43, or 12 pounds
(if the weight were to be 12.5 or more, most
carriers would round up).
That foot by foot by foot box has a dimensional
weight of 12 pounds. But let’s say the order’s
actual weight is 13 pounds. In that situation,
shipping carriers will base your shipping rate off
the actual weight because it’s greater.
To the benefit of shipping carriers, dimensional
weight does a solid job at forcing merchants to be
careful with how they package an order. It
discourages any wasted space, thus saving the
merchant money and the carrier space for more
Alongside weight, distance plays a major part in shipping rate
calculations. To help streamline the process, shipping carriers
tend to use what are called zones to pinpoint rates. Although
most U.S.-based carriers will use zones to determine rates,
others, such as Canada Post, may use a different method of
measuring distance like
Think of zones as waves that fan out from the location you’re
shipping from — the further the zone, the greater its number,
and the higher the shipping rate. Whatever zone an order’s final
destination falls into will be the zone that determines a rate.
Shipping carriers formulate their shipping methods with weight
and distance chiefly in mind, so you can bet that the method you
select will impact your shipping rate. But those aren’t the only
two factors — speed also plays a major role in how their
services are designed.
In general, shipping carriers offer wide-ranging services that
are more or less similar among each. Here are some common types
of methods that carriers employ:
- Flat-Rate Methods
Some shipping carriers offer flat-rate services. If
an order fits into one of their carrier-made boxes
and doesn’t exceed weight limits, they’ll charge you
a flat rate for a range of zones.
- Fast Methods
One to three days or overnight, all carriers offer
speedy shipping methods for hasty delivery. How
quick a shipping method is will impact your shipping
- Low-Weight Methods
Whether it’s USPS’ First Class, FedEx’s SmartPost,
or UPS’ SurePost, shipping carriers typically offer
extremely cost-effective services specifically for
small and lightweight orders.
- International Methods
International shipments will have a serious impact
on shipping rates. Not only are they high-distance
by nature — meaning high price — they tend to
include more additional charges than domestic
On top of speed, shipping carriers will also attach some extra
incentives to certain methods to make them more appealing. Order
tracking and delivery confirmation are a couple of biggies.
Ultimately, the shipping method selected will put its finger on
the scale when it comes to how expensive a rate is. If it’s a
quicker delivery method, rates will be higher. If it’s a method
designed for lightweight orders, rates will be lower.
Once a shipping method is selected and weight and distance are
calculated, additional charges will often make their way into
your final shipping rate. It’s one of the more irksome parts of
shipping for many e-retailers, and because nobody wants to pay
more on top of their rate, some opt for shipping carriers that
don’t pile on the fees.
Additional charges can be slotted into three groups: fees that
only apply if a service is requested by the e-retailer, fees
that apply based on the condition of an order, and fees that
apply based on shipping specifics.
- Shipping Specifics
These type of fees tend to be non-negotiable and
tied to delivery method. The most common is a fuel
surcharge, where a carrier charges you a fee that
covers their fuel costs. Another example is a
residential delivery fee, where the carrier dings
you a bit for a delivery to a home or business
- Order Condition
An order’s contents and how it’s packaged can
influence charges. For instance, any order that
contains a fragile or dangerous good will incur an
additional charge. And if a package surpasses
certain dimensional and weight requirements, other
fees like additional handling will be tacked onto
- Requested by Shipper
For specific service requests, like signature
confirmation on delivery, shipping insurance, or
package pickup, carriers will charge you. They’ll
also charge you for requests to fix an error you’ve
made, like needing to change an address or rerouting
For a deep dive on the many services that shipping carriers
offer, as well as common additional charges e-retailers
experience using each, check out any of our shipping carrier
USPS, FedEx, UPS, Canada Post, and DHL.
Although shipping carriers invest plenty of time and money into
getting their logistics networks in ship-shape, errors do occur.
Shipping insurance exists to reimburse e-retailers if something
goes wrong with a package, whether it’s lost, stolen, damaged,
Free or at a cost, all carriers will offer some form of shipping
insurance. In many cases, they will automatically include a
default amount of liability coverage, typically $100 worth, with
every order. Many carriers will include it for all methods as a
competitive advantage, but some only guarantee it for pricier
methods that aren’t economy-class — it just depends on who
For expensive orders, however, an e-retailer may choose to
purchase more shipping insurance to cover themselves against any
loss. Any amount that you want covered beyond a carrier’s
default amount is referred to as “declared value” or “insured
value” — you’ll set the declared value of your order and they’ll
charge you a bit for every $100 of value you add.
Again, weight, zone, shipping methods, and additional fees all
work together to sum up a shipping rate. A glimpse of this chart
is all you need to understand how they play into one another:
FedEx First Overnight®
Next day by 8:30 am
FedEx Standard Overnight®
Next day by 3 pm
2nd day by 4:30 pm
Don’t worry. Nobody expects you to calculate shipping rates on
your own or drag a finger up and down a chart to find what the
shipping rate of an order will be. There are a few services out
there that will do the number-crunching for you.
In the past, you had to take your shipment to a physical post
office that did all the work for you, like packaging the
product, determining a rate, and all that jazz. Fortunately, the
worldwide web didn’t just provide the means for consumers to buy
anywhere, it also provided the means for people to ship all on
There are a few tools out there that an e-retailer (or just your
average consumer) can use to calculate shipping rates.
Directly Through Carrier
Shipping carriers always offer their own online calculators that
allow you to input every aspect of your shipment, from weight to
product dimensions to ship-to addresses, to calculate a rate.
Here are the tools of some popular carriers that you can use
after creating an account with them:
The downside to these calculators is that they’re a little
inefficient. If you’re shipping an order or two every now and
again, they’re fine, but they can be time-consuming when you’re
shipping a higher order volume.
Directly Through Platform
To simplify the process and save yourself time, you can
calculate rates directly through the sales platform you’re
using, like Amazon or Shopify. Many online channels will connect
with a variety of shipping carriers, calculating the cost to
ship for you (and the consumer).
Because a sales channel already knows your ship-from location,
the customer’s address, and product information like weight or
dimensions, they have all of the information needed to create a
shipping label. By integrating with a variety of shipping
carriers, they can communicate with them to automatically
calculate real-time shipping rates.
Even so, using a sales channel to calculate rates carries some
of the same disadvantages as going through a carrier’s
calculator. If you’re selling on multiple channels, hopping on
each to get rates can be tedious.
Enter: software solutions (like us). Shipping software tools
will integrate with as many shipping carriers and sales channels
as they can. The tool then acts a single hub where the user can
view and ship orders from all of their channels.
Plus, shipping software tools will usually bundle in a bunch of
other features and benefits (like discounted
USPS shipping rates). For
more on that, visit our our
Shipping Workflow guide.
But a shipping rate is only how much you will need to pay to get
a shipment from A to B. What comes next — the shipping label —
contains all the information a shipping carrier needs to get it
to the customer’s door.
Learn about shipping labels →