How much to charge for shipping: setting shipping rates for your online store

Short answer: Charge enough for shipping to cover what an average order really costs you to send (postage, box, packing materials and the time to pack it), minus whatever part you are willing to absorb to win the sale. For most small stores that means one of four approaches: free shipping built into the price, a flat rate, free shipping over a minimum order value, or rates calculated by weight or size. Start from your numbers, not from what big retailers do. Rates are easier to keep accurate on an e-commerce platform that calculates shipping rates by weight or size.

Step 1: Work out what shipping really costs you

Before you choose a strategy, find your true cost per order. Take your last 20–50 orders (or a sample of typical parcels if you haven't launched yet) and add up, for each one:

• Postage from your carrier's rate for that weight, size and destination zone
• Packaging: box or mailer, filler, tape, labels
• Packing time, if you pay someone to do it
• Losses: a share of parcels that get damaged or lost and need replacing

Divide by the number of orders to get an average. That number is your floor: anything you charge below it comes out of your margin.

Watch the size of your boxes, not just the weight. Carriers price light but bulky parcels by dimensional weight. For example, USPS prices Priority Mail parcels larger than one cubic foot on the actual weight or the dimensional weight, whichever is greater, with dimensional weight for a rectangular box calculated as length × width × height in inches divided by 139. Other carriers use similar rules, so a box that's a size too big can cost more than the product inside it.

Step 2: Choose a shipping strategy

• Free shipping — How it works: Cost is built into product prices; Good for: Products with healthy margins and similar parcel sizes; Watch out for: Higher product prices next to competitors
• Flat rate — How it works: One fee per order (or per zone); Good for: Products of similar size and weight; Watch out for: Overcharging small orders, losing money on heavy ones
• Free over a threshold — How it works: Free above a minimum order value, flat rate below; Good for: Raising order value; most small stores; Watch out for: Setting the threshold too low to pay for itself
• Calculated rates — How it works: Charged by weight or size and destination; Good for: Very mixed catalogs, heavy or bulky items; Watch out for: More complex for the customer to predict

You can mix them: calculated rates for furniture, a flat rate for everything else, and free shipping over a threshold for loyal customers.

Step 3: Set a free shipping threshold you can afford

"Free shipping over X" works because customers add one more item to reach it. To pick X:

1. Find your current average order value.
2. Set the threshold a little above it, so a typical customer needs to add something small to qualify.
3. Check the margin: on an order right at the threshold, does the profit still cover the shipping you are now paying? If not, raise the threshold.

Review it after a month or two. If almost nobody reaches it, it's too high; if almost every order already qualifies without adding anything, it's too low and you're giving away margin.

Step 4: Show the cost early

Surprise costs are the biggest reason people leave at checkout. In Baymard Institute's research on why shoppers abandon checkout (excluding those who were just browsing), 40% said extra costs such as shipping, tax and fees were too high, and 12% said they couldn't see or calculate the total order cost up front. So:

• Put your shipping rates or threshold on product pages and in a short shipping policy, not only at checkout.
• Show the remaining amount in the cart ("Add $12 more for free shipping").
• State delivery times next to the price: 20% of shoppers in the same research left because delivery was too slow.

Step 5: Handle international orders separately

Shipping abroad changes the math: postage is higher, delivery is slower, and someone has to pay import duties and taxes. Set separate rates for each country you ship to rather than stretching your domestic flat rate. We cover pricing in local currency, duties and paperwork in our guide on how to sell online internationally.

Step 6: Review your rates regularly

Carrier prices change, and so does your product mix. Put shipping on your monthly review alongside profit per order; it's one of the routine checks in how to manage an online store. If shipping is eating into margin, adjust the threshold, the flat rate or your box sizes before you touch product prices.

How Favenda helps

In Favenda you set shipping rates by weight or by size, add a free shipping threshold, and give each sales region its own currency, payment methods and shipping rates. For international orders, DHL Express, UPS and FedEx are built in: labels print from the order screen, a commercial invoice is created with the shipment, and tracking updates automatically. Each order shows real profit after shipping and payment costs, so you can see whether your rates cover what you spend. There are no transaction fees on your sales.

See Favenda →

FAQ

Should I offer free shipping?
Offer it if your margins can absorb the cost, either built into prices or above a minimum order value. If your products are low-priced or heavy, a flat rate or free shipping over a threshold is usually safer than free shipping on every order.

What is a good free shipping threshold?
There's no universal number. A practical starting point is slightly above your current average order value, then check that an order at the threshold is still profitable after you pay the shipping.

Should I charge a separate handling fee?
You can, but customers see it as part of the shipping cost anyway. It's usually clearer to include packaging and handling in one shipping rate, or in your product prices, than to show a separate line at checkout.

Sources: Baymard Institute, "Cart Abandonment Rate Statistics"; USPS, Domestic Mail Manual 223 (Priority Mail dimensional weight). All read on 23 October 2026. Carrier rates and rules change often; check your carrier's current price list before you set your rates.