The true cost of shipping for small businesses
One thing many folks don't realize is that the cost of shipping anything, especially items that weigh over two pounds, has increased significantly over the last decade.
Add to that any special handling, packing materials, and expedited service for perishables, and it can often feel overwhelmingly like the cards are stacked against us.
Before we get into details, I want to pose these questions to you:
When was the last time you mailed someone a package?
How much did it weigh?
Were you able to re-use the packing materials you had on-hand?
How far was the receiving zip code from your own?
How much time did it take you to pack it (and possibly bring it to the post office or shipping center)?
If you've attempted to mail a slightly heavy package on your own, not just applied a prepaid label and returned an item, you'll be a lot better informed about what the true cost of shipping is today.
And, no, small businesses like mine don't enjoy massive shipping discounts like large corporations do.
But, if you're not someone who does the above, don't worry, I'll detail these costs to you here in this post.
The true cost of shipping packages for small businesses.
Before we get to the actual postage or package delivery fees, there is first a time and materials cost.
Pick & pack fees
For us to send any order, we pay a pick & pack fee.
This is very standard, and while those fees may vary with the size of a company and how many packages they send/how complex they are, we pay $2.95/box for our dry goods to be packaged up.
Could we try to negotiate a lower rate for this? Possibly. But am I going to nickel and dime about what people say they need to be paid for their labor? Nope, I am not.
If this becomes excessive, I'll certainly address it, but the time and effort it takes to pick, pack, weigh, and label each box is real – and it is done real people.
The packing materials also cost money!
Some packages may go by USPS Priority mail or by another flat rate option, which saves a bit on the box itself (USPS provides boxes for some service rates), but this doesn't apply to all orders.
Further, internal padding / packing materials are also used. We don't reuse materials like you might at home (and like I often do from the shop) since our warehouse cannot do this.
Postage for dry goods (USPS or UPS)
Here are some examples of packages that were sent from Chicago, IL (where our dry goods warehouse is located) recently:
|shipped to||# of items||package weight||customer price||postage fee||shipping net||packing fee||net shipping & handling|
|AZ||7||4 lb 7.84 oz||$7.00||$13.55||-$6.55||$2.95||-$9.50|
|WA||7||4 lb 13.12 oz||$7.00||$13.55||-$6.55||$2.95||-$9.50|
|MT||7||4 lb 8.32 oz||$7.00||$12.89||-$5.89||$2.95||-$8.84|
|CA||6||2 lb 10.56 oz||$7.00||$11.63||-$4.63||$2.95||-$7.58|
|IL||7||9 lb 13.76 oz||$7.00||$11.10||-$4.10||$2.95||-$7.05|
|AZ||8||3 lb 4.16 oz||$7.00||$10.98||-$3.98||$2.95||-$6.93|
|MD||8||4 lb 0.48 oz||$7.00||$9.68||-$2.68||$2.95||-$5.63|
|KS||12||6 lb 0.64 oz||$7.00||$9.56||-$2.56||$2.95||-$5.51|
|CA||2||1 lb 14.72 oz||$8.95||$11.35||-$2.40||$2.95||-$5.35|
|CO||5||2 lb 12.16 oz||$7.00||$9.01||-$2.01||$2.95||-$4.96|
|CA||3||1 lb 8 oz||$8.95||$10.70||-$1.75||$2.95||-$4.70|
|MN||4||2 lb 7.36 oz||$7.00||$8.72||-$1.72||$2.95||-$4.67|
|MD||7||1 lb 7.36 oz||$7.00||$8.34||-$1.34||$2.95||-$4.29|
|CO||2||1 lb 12.8 oz||$8.95||$8.85||$0.10||$2.95||-$2.85|
|CO||4||1 lb 6.56 oz||$8.95||$8.85||$0.10||$2.95||-$2.85|
|MN||3||2 lb 6.72 oz||$8.95||$8.34||$0.61||$2.95||-$2.34|
|MD||2||1 lb 13.12 oz||$8.95||$8.24||$0.71||$2.95||-$2.24|
|NC||4||2 lb 13.76 oz||$10.95||$9.01||$1.94||$2.95||-$1.01|
|ME||5||2 lb 4 oz||$10.95||$9.01||$1.94||$2.95||-$1.01|
|Average per package||$8.08||$9.94||-$1.86||$2.95||-$4.81|
As a small business, we don't enjoy the mass-scale shipping discounts that large companies do.
In fact, we've completed the above shipping cost analysis a few times over the last several months.
And, knowing that shipping rates will soon increase for the holiday surge period and likely beyond, we will once again need to re-assess what we charge for shipping & handling and look to raise our rates.
As much as I've enjoyed offering a lower flat rate over a certain threshold, as you can see, that approach is really not a good idea for us.
Ultimately, selling small, high quality real food items like we do doesn't leave much margin to buffer additional losses on shipping and handling.
The true cost of shipping perishables for small businesses.
Before we get into details of shipping cold, perishable goods, I want to remind you of what goes into the packing and preparation of these items before the shipping rates are even calculated:
- the labels on the trays, .35
- the double-walled shipping box, $1.80
- the liner that is inside the box to keep things cold, $5-7 depending on the season
- the ice packs, $1.50-3 depending on the season
- the dry ice, $3-4 depending on the season
- the informational insert in each box, $.36
- the labels & branded tape on the box, $.40
- shipping insurance, $2
We're at about $19 just for the materials for the package alone!
If you wondered why we don't have a custom printed, branded box, those cost even more than our boxes plus the tape, and they'd be thinner (not the double wall which helps contents remain colder), and I can't justify it for something that's getting thrown out so immediately! We aren't a big company with multi-million dollar investors, it's just me!
- the shipping carrier fee, on average is $15-25 (depending on box weight and distance from the kitchens).
To send perishables, we need to ensure that the package can arrive within one to two days around the country. Now, we do ship from two separate kitchens (one on each coast) to help make this easier and cut the shipment times, but it's still tricky – and costly! Note that we automatically upgrade shipping on orders for folks who live outside of a 2-day ground shipping range from one of our kitchens.
And that doesn't include the cost of the food itself and the labor it takes to cook, package, and ship it all!
All of these elements have costs to them, and they've only been rising year after year, most sharply post COVID-19.
So, when you look at the cost of ordering a box of meals, remember that we do not add a separate shipping fee, we factor it into the price per meal.
We are able to do this with a 10 meal box requirement, but we don't price our dry goods this way.
Rather than have you build a cart and see a potentially scary-looking shipping fee at checkout, we do it this way to make the process more seamless for you when ordering meals.
One day, that may change. If shipping rates keep increasing, we may need to pivot. For now, this is how we do things.
I hope you found this article helpful.
If you have any questions, please reach out to our team – hello (at) balancedbites.com and we'll help you out.
For more business behind-the-scenes information, check out these posts: