How you calculate shipping rates can have a major impact on your business. Shipping can be expensive, especially for last-mile delivery, and customers are sensitive to shipping costs. Recent research from McKinsey shows that 90% of consumers are likely to abandon shopping carts that feature high shipping costs for standard items.
It’s important to strike a balance between offering shipping prices that are attractive for customers and sustainable for your business. Working with a third-party logistics (3PL) provider, like Amazon Supply Chain Services (ASCS), which offers fulfillment through Amazon Multichannel Fulfillment (MCF), can help you scale while lowering fulfillment costs to stay competitive, no matter the sales channel.
In this blog, we’ll explore pricing strategies that best suit your business and your customers’ needs, and we’ll help you estimate shipping costs with our shipping cost calculator.
Pricing strategies and shipping costs
Free shipping
Free shipping is becoming an increasingly popular pricing strategy. You can offer free shipping to your customers on some or all of your products.
Researchers from Digital Commerce 360 found that 73.9% of survey respondents say free shipping is the most important factor when selecting online retailers to do business with. Advertising free shipping on your website is a powerful message and might persuade customers to choose your business over a competitor.
To offer free shipping without impacting your profit margin, factor the shipping cost into the selling price of your products. Although this may increase the price of the item, it will help meet customers’ shipping expectations.
An alternative is to offer free shipping with a minimum purchase value. This helps offset the cost of covering shipping and acts as an incentive for customers to buy more items to reach that threshold.
With MCF, for example, you can save up to 50% on per-unit fulfillment fees when you ship multi-unit orders, allowing you to cover shipping for your customers.
Hatch and MCF
Tiered shipping
Another pricing option for ecommerce businesses is a tiered shipping strategy, which means assigning different shipping prices based on how quickly the product is delivered.
MCF currently offers two click-to-delivery speeds: Expedited, which delivers in two business days, and Standard, which delivers in three business days. MCF’s fast and reliable shipping and competitive rates provide your customers with the fast shipping they want.
You can also offer Prime shopping benefits—including fast, free delivery and a trusted checkout—on your ecommerce site. In fact, merchants experienced a 16% increase in revenue per shopper, on average, when offering Buy with Prime.* Learn more about how Buy with Prime can help grow your ecommerce website.
MCF also allows you to offer upfront delivery promises to your customers on your website’s checkout page, based on their location and order items. This helps set expectations, elevate the customer experience, and decrease the risk of shopping cart abandonment.
How to calculate shipping costs
To make the right shipping pricing decisions for your business, you can use a cost calculator, like the Algopix cost calculator, to estimate shipping costs and your fulfillment costs with MCF—which are fully inclusive of pick, pack, and ship. Algopix is a market intelligence engine that helps online brands make data-driven decisions.
Since 2016, Algopix users have analyzed over 226 million products and 23 million brands across 17 marketplaces. The Algopix dashboard gives you a comprehensive look at average pricing for products and estimated profit after deducting expenses like fulfillment.
MCF has simple, transparent pricing, with just one fee for pick, pack, and ship, to make your decision-making easier. Create your free account with Algopix to access the cost calculator and calculate your shipping costs.
* This data point is based on A/B testing results collected between July 2023 and June 2024 from 167 merchants, and measures the average increase in revenue generated when Buy with Prime was a purchase option versus when it was not, during the same time period.
