What do you need to know when calculating delivery charges?

If you’re an online seller entering the world of long-distance deliveries, navigating delivery charges is sometimes easier said than done. There are several factors to consider when setting up shop – not least the many underlying regulations that can directly affect your business.

So, in this article, we’ll look at what you need to know about setting delivery charges.

Let’s dive in!

Different Delivery Charges

When it comes to setting delivery charges, there are two main strategies to consider:

Real-time rates

This is when shipping is charged relative to the customer’s location. It calculates the real-time delivery cost from the shipping site to your customer’s doorstep. 

This includes things like mileage, fuel cost and package weight. It’s a great option for sellers because it ensures that shipping prices don’t overeat into the seller’s profits.

On the customer side of things, it presents a transparent way of communicating delivery charges. However, bear in mind if a customer lives far from your warehouse, they may be put off by your steep delivery charges.

Flat rates 

This is when you charge a set delivery cost regardless of the customer’s actual destination, fuel costs or mileage. 

It’s usually calculated based on a threshold separating different products by weight, providing an average delivery cost. The advantage of this strategy is that it prevents customers from being drastically under or overcharged. However, suppose your customer’s destination is far away. In that case, it won’t be accounted for in the final delivery charge, and you may end up paying a small fortune!

Regardless of which method you choose, as a business you must ensure customers are given the cost of delivery upfront. Under UK law, you must include the delivery charge within the final sales bills. You cannot change this price once the deal is made.

Best delivery practices and choosing the right courier

When searching for the right courier for your business, ensure they uphold the best possible delivery practices. After all, when a customer buys from you, it forms a contract between you and them. This is a legally binding commitment on your part to meet the standards stipulated covered by the delivery charges the customer has paid for. If you fail to meet this commitment, it can be costly, damage your reputation and leave your customers unsatisfied. 

As an online seller, you rely on the courier to ensure you deliver on the promise you made to the customer. But, if something goes wrong, you carry the burden, not the courier. So, choosing the right person for the job is crucial!

Tips and takeaways

Aside from choosing your shipping strategy and courier, you should also consider things like:

  • Packaging – this can add weight to the product
  • Insurance – this can add costs to courier fees
  • Unexpected delivery charges – such as customs fees, weight limits imposed by the courier and package losses

Final thoughts

With these points in mind, we hope you’ve gained a better insight into how delivery charges are calculated. For more information, take a look at Business Companion’s best practice guide for traders selling goods at a distance. It will help you ensure you always stay on the right side of consumer law and deliver the right way, every time! 

Business Companion offers a wealth of easy-to-understand guides on the best trading practices, backed by legal and regulatory insights. And it’s free! If you want to learn more about best trading practices, check out Business Companion’s guide repository today. We cover a wide range of topics, from consumer laws and dispute resolution to selling online.

Read More

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