When there is any significant change in your incurred costs or in your method of determining shipping and handling charges, it’s time to review your costs.
Costs Included in Your Shipping and Handling Charges
This decision is, at the same time, a matter of consumer perception, a marketing issue and a legal issue.
The charges should be clearly understandable and fair to the consumer. From a consumer perspective, high shipping and handling charges can be a deterrent to customer purchases and customer satisfaction.
From the marketing perspective shipping and handling charges are a factor in your competitive stance and in your brand reputation.
Previous legal and regulatory actions have claimed that some marketers have been deceptive about setting their shipping and handling charges and should cause all direct marketing executives to take care in determining which costs to include and in substantiating shipping and handling charges.
Each consumer should be charged fairly. Your goal should be not to charge consumers as a whole more than you pay in total. No single or “correct” formula exists for calculating or charging shipping and handling. For simplicity, some marketers create an easy-for-the consumer-to-understand method of charging based on price or weight or distance of delivery.
Some consumers think the price of shipping and handling should be limited to your actual common carrier cost. Of course, much more is involved and you must be prepared to explain the justification for the individual cost to an individual consumer inquiring about the fairness of his or her individual charge.
There are clearly risks associated with including certain categories of expense in your shipping and handling charge. Below we’ve identified some costs that some marketers have included. There may be others. In general, the more indirect your charge, the less consumers are likely to understand why you are charging them for it.