Enter the weight and dimensions of your package, then run a few tests using different destinations. Use the appropriate shipping calculator to determine the average cost of shipping to your customers. You can create an accurate estimate with the resources in our eBay and Amazon Packaging Costs article, or just enter $1.00 as a rough estimate if you’re only sending small packages. Remember, if you don’t have employees, use whatever you see as your minimum acceptable hourly income as the hourly rate.ĭetermine how much you’ll spend on packaging (boxes, cushioning, tape, etc.) and enter that amount here. Use the formula from earlier to determine your handling cost per item: Then answer the following questions to determine the cost of S&H for any item in your inventory: Now that you have all the knowledge you need, here’s how to calculate shipping and handling.įirst, open a spreadsheet or grab a sheet of paper and number lines 1 through 4. Use it as your handling cost when calculating S&H. The result is your “opportunity cost”-the time you could have spent doing other things that would make money. Finally, complete the same formula from above: Then set the minimum amount you’re willing to earn per hour while preparing and shipping items-that’s your hourly rate. But if you have to spend 20 minutes preparing it for shipping, you’re making just $7.50 per hour-minus the value of the time you spent identifying the item, buying it, and creating the listing!įind out how long it takes you to prepare an order for delivery. When you first start selling online, you may see that you can sell an item for a $2.50 profit and think hey, that’s worth doing. If you work alone, you might think you have no handling costs. If you have employees, then you have to multiply how long it takes them to prepare each item for shipping by how much you’re paying per hour.
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