How To Setup & Calculate Shipping Rates On Shopify

If you have read our article about How To Setup Local Delivery In Shopify and successfully enabled local delivery within your online store, it’s now time to figure out what to charge your customers to ship their items. 

This can be challenging, especially when it’s your first time offering this service. You want to make sure you’re charging enough whilst still being kind to your customers. 

Sometimes, it can be daunting to see your prices jump up to incorporate a shipping cost, but it’s crucial to cover all related expenditures to make this service sustainable for your business. In fact, customers tend to value free shipping over lower prices, so it’s likely this could improve sales. 

That’s why controlling your Shopify shipping rates is an important aspect of your local delivery service. Setting up shipping rates and calculating what to charge your customers depending on the shipping zone, speed, and product can seem complicated. 

We’re about to break down everything you need to know about how to set up & calculate Shopify shipping rates. By the end of this article, you will have a clear understanding of the different elements of Shopify shipping rates and how to incorporate them into your online store. 

What are Shopify shipping rates?

Shipping rates are what you charge your customer for the delivery of their goods. When a customer proceeds to pay, the shipping rate for their order will be added at the checkout of your Shopify store. 

There are several types of shipping rates that you will need to consider: 

Local Delivery Rates

Now that you’ve enabled local delivery in Shopify, you will need to set up a minimum order amount to qualify for shipping and the rate that you will be charging. This will be displayed when your customers select local delivery at checkout. 

If you use an app within your Shopify store instead of the built-in delivery feature, then you will have more control over the shipping rates you charge. For example, using Pro Pickup: Store PickUp allows you to set up unique local delivery rates and request deposits, depending on the purchase. 

Free Shipping Rates

Free shipping rates are straightforward, it simply means that there is no charge to the customer for shipping their order. You can apply free shipping as a flat rate sitewide, meaning all products are eligible for free shipping. Or, you can apply it to certain purchases, for example, free shipping on orders over $50 or $100, and so forth. 

Flat Shipping Rates

Flat shipping rates are more complex than free shipping rates, but they are a helpful way to control specific shipping costs. Flat shipping rates in Shopify can be weight-based, price-based, or a general set rate no matter what the order. 

Flat shipping rates can be customised in the following ways: 

Weight-based flat shipping rates: This will allow you to set different shipping rates depending on the minimum and maximum total weight of the final order. For example, orders under 5kg may cost $3.99, orders between 5 to 10kg at $5.99, and orders 10kg plus $8.99. To do this, you would set a flat shipping rate per weight category. 

Price-based flat shipping rates: Much like weight-based shipping rates, you can set a shipping rate depending on the amount spent. For example, orders under $50 may be charged $5 for delivery, and orders over $100 qualify for free shipping. You can set the different shipping rates per price category in your Shopify settings. 

General flat shipping rates: General shipping rates are applied to all orders, depending on the type of shipping chosen by the customer. This applies when you have a set rate for different local delivery methods. For example, setting your standard shipping rate to $5 and express shipping rate to $10, regardless of what the customer orders. 

Calculated Shipping Rates

Calculated shipping rates are based on the charges set by your chosen courier. When a customer proceeds to checkout, their order information will be automatically sent to the courier who will generate a shipping cost. 

This can be an effective way to protect your business from rising fuel charges that you may not have accounted for in your set rates. However, the ability to directly link a courier to your delivery settings depends on the Shopify plan that you are subscribed to, as well as your location. 

How do I decide what Shopify shipping rates to charge?

There are several costs you need to consider when planning what to charge your customers for delivery services. These can include courier charges and packaging at a basic level, scaling up to include fulfilment costs if you need to outsource a logistics service provider for drop shipping or managing and processing orders at a large scale. 

When deciding on what Shopify shipping rates to charge your customers, you will need to create a shipping strategy that covers the relevant costs whilst providing good value for your customers. 

Take the following factors into consideration when planning your Shopify shipping rates strategy: 

Calculate the average weight of your product library

If you don’t have one already, we recommend starting a database that records the weight and cost for each item sold on your online store. 

Shipping rates are commonly based on weight, so having this documented will allow you to compare product weights against what your courier charges. It’s also useful to have the value to hand, in case some couriers charge more for items that exceed a certain amount.

With this information, you can calculate the average weight of your products, which will allow you to use a weight-based flat rate. This can be a great strategy for new businesses who need the full shipping cost to be included in the sale. 

Charge exact shipping rates

If you’re starting a new business, you may not be in a position where you can cover any portion of the shipping costs. In that case, you should start by setting your shipping rate to the exact charge of the courier. 

This is the calculated shipping rate and can be enabled automatically depending on your location and Shopify plan. 

Revise your product price list

If you want to offer a free shipping rate without breaking the bank, then you should update the prices you are charging to incorporate the average cost of shipping per item. 

Offering free shipping is a great way to retain customers. In fact, a study by the National Retail Foundation found that 75% of consumers expect free delivery, and 65% check that the delivery is free before proceeding to checkout. 

Increasing the price of your products to include shipping is a beneficial marketing strategy and adds value to your offer without costing your business. 

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Your shipping strategy will likely change depending on your level of success and what stage your business is currently going through. The important factor to consider is that without a financially sustainable plan, then you’re going to run into obstacles further down the line. 

Don’t be afraid to incorporate the full delivery cost into your Shopify shipping rates if it will enable you to provide a reliable delivery service. 

Ready to set up your Shopify shipping rates?

Now that you have a cost strategy in place, it’s time to set up your Shopify shipping rates. There are a number of ways to do this, depending on whether you have used Shopify’s built-in delivery system or integrated a delivery application. 

Built-In Shopify Local Delivery

Shopify’s built-in local delivery is a straightforward way to set up Shopify shipping rates but can be limited depending on the plan that you are subscribed to and your location. 

Shopify’s local delivery allows you to manually set the different types of rates that we have discussed. Remember, the customer’s eligibility will depend on their postcode or radius from your fulfilment center. 

Within your Shopify settings, you can apply shipping rates to different zones, delivery types, or order-specific factors. Just go to settings, click shipping & delivery, and then navigate through the different local delivery options. 

App-Based Shopify Local Delivery

Applications are designed to provide solutions for specific functions, so it’s no surprise that using a local delivery app within your online store will give you more control over the setup of your Shopify shipping rates. 

Using Pro Pickup: Store PickUp to set up shipping rates in Shopify will give you more flexibility and control over your local delivery service. Key features include: 

  • Bulk upload locations: Save time by uploading your delivery locations and setting rates in bulk.
  • Set unique local delivery rates: Choose a rate category from the options above and apply unique rates to local delivery orders. 
  • Request delivery deposits: This safeguards both you and the customer by paying a deposit upfront and the rest of the delivery charge upon receipt. 
  • Add shipping tags: Separate local delivery orders from the rest by adding shipping tags to your Shopify admin panel. 

Frequently Asked Questions

Will my Shopify shipping rates impact the customer experience?

Your Shopify shipping rates will not impact the customer experience. Shipping rates will be integrated throughout your online store using either Shopify’s built-in local delivery or a local delivery app. This means that the shipping charge won’t be visible to the customer until checkout when the appropriate rate will be automatically applied to their order. 

How will I know whether charging for shipping is making me lose customers? 

Doing market research will allow you to get to know your customers better and what they look for when shopping online. There are also analytics within Shopify that provide insight on conversion rates and returning customer rates, where you can compare from before and after charging for shipping. You won’t know for certain until you introduce local delivery and charge Shopify shipping rates. To understand your customers better and what they value the most, contact your existing customer base via email or social media with some survey questions. 

How can I avoid charging for shipping on Shopify?

There are a number of ways to provide free shipping without losing out financially. As we mentioned earlier, start by revising your current pricing structure to account for shipping costs as part of your base price. You can also consider doing special promotions to boost sales and fund free shipping. For example, incentivize customers by offering free shipping for orders over a certain amount. This will increase your revenue and add value to the customer experience, which will account for the shipping charge. Remember, your shipping strategy will adapt according to your current business forecast. Choose a Shopify shipping rates structure that best suits your current circumstances and will enable you to provide a reliable and efficient local delivery service.