How to set delivery rates?
Several criteria should be taken into account when determining the prices of your delivery methods:
- Your total delivery costs.
- What your competitors offer.
From this data, you will have the keys to determine the elements of your delivery pricing policy:
- Rates as close as possible to the actual cost.
- Free delivery.
- Free delivery from a certain basket amount.
- Free returns or not.
Estimating total delivery costs
The total delivery cost of a package can be broken down as follows:
- Cost of packaging.
- Cost of one-way transport (or one-way transports in the case of a multi-package shipment).
- Cost of insurance if you choose to insure your shipments.
- Cost of order preparation (possible labor cost).
- Return rate (if you don't have an idea yet, start from 10%) x cost of return transport if you do not charge the return costs.
If you have items that vary wildly in size/weight, it may be desirable to define relevant package categories based on your shipping statistics, for example:
- "Small package" category whose dimensions are less than 15x15x15 and weight less than 2 kg.
- "Medium package" category whose dimensions are greater than 15x15x15 and weight 2 kg but less than 50x50x50 and 20 kg.
If you offer several delivery methods, you must redo these calculations for each method. For example :
- "Small package" category, "Parcel point" delivery method, average cost = €5.
- "Small package" category, "Express" delivery method, average cost = €13.
Monitoring the competition
It is important to take into account the alternatives available to your potential customers and to keep an eye on the delivery rates offered by your competitors.