The Delivery Charges Algorithm

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By Sam Adedeji

In this day and time where shopping online is gradually becoming the order of the day, understanding how shipping goods works as a vendor is very important, you do not entirely focus on making a profit off your goods because your delivery fee will determine whether your customer will patronize you or not. The common ways to handle the shipping rate for your business are:

Free Shipping: This type of shipping has no charges at all. It is totally free and most times, hidden charges aren’t involved. Most times, the seller bears the cost of delivery. It is best used when running promotions for your brand.

Flat Rate Shipping: It has a single rate/amount for all orders, no matter the weight and distance. So the delivery of a bag of rice and the delivery of a cup of rice has the same price.

Price Based shipping: the price of the item purchased determines the shipping price. The price fluctuates as it is been determined by the price of the goods ordered. Most E-commerce platforms use this method in determining their shipping price.

Real-time Shipping rate calculator: International logistic outfits such as FedEx, UPS, DHL and others have a shipping rate calculator. You can decide to use their calculator to determine your shipping rate real-time.

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How to Determine the shipping cost

Determining the shipping cost of products, especially for flat rate shipping can be very tricky. However, these few steps will help you in making the right decisions.

Step One: Figure out the average cost to ship each of your products to different locations.

Step Two: Pick a logistics firm that is very popular and trusted with your product type and delivery route, also find out the sizes and weights for each of your products.

Step Three: Once you know the weights and sizes of your products, consider the location of your target audience, be mindful that urban area shipping cost is cheaper than rural locations even if they are geographically close to you.

With the above steps, you will be able to develop a flat rate shipping cost for your products.

The 1000 Naira Shipping

There is no standard shipping cost for business, but this will help your business. After you determine the cost of shipping your product, take a thousand Naira off that price and increase the price of your products by the difference.

For Example: You sell foot-wears; a particular loafers has a selling price of N17,000. You discover the average shipping cost goes for N3,500. Increase your selling Price to N19,500 while you make the delivery charge a thousand Naira. Now you have assigned the entire shipping cost to the customer.

On a final note, it is either you take responsibility for the delivery charges (which will reduce your profit margin) or you pass on the cost to the customer.

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