What You Need to Know When Calculating Delivery Charges


If you sell goods online and send them by post or courier to your customer, then you need to navigate delivery charges. This is known as ‘B2C’ (business to consumer) selling, and you need to understand and follow best practice when it comes to delivering your goods. There are many things you need to bear in mind, and there are many regulations to consider. Sometimes, it can be easier said than done.

So, in this article, we’ll take a look at what you need to know about setting delivery charges.

Different Delivery Charges

When calculating and setting delivery charges, there are two main methods to choose from:

Real-time Rates

Real-time rates apply when shipping is charged relative to the customer’s location. With this method, the real-time delivery cost from the shipping point to arrival at the customer’s doorstep is calculated.

Factors like package weight, the mileage and the cost of the fuel are taken into account. It can be a useful option for traders as by setting the delivery cost this way, they can be sure that shipping doesn’t eat too far into their profits.

For the consumer, it is also a very transparent way of communicating delivery charges. But the further the consumer is from the trader, the higher the delivery prices become. So, not only can your total price to customer increase heavily, but it can also put them off buying your product.

Flat Rates

Flat rates are when a set delivery cost is charged, irrespective of where the delivery address is, mileage or fuel costs.

Normally, this rate is set based on a threshold which separates different products by weight. This serves to provide an average delivery cost. One advantage of this method is that is stops the consumer from being excessively over or undercharges. But the further the delivery address is, the less advantageous this becomes for the trader. As the destination isn’t part of the calculation, the final delivery charge can end up chewing into your profits!

Whichever method you choose, you need to be completely transparent with your delivery costs to the customer, and it needs to be upfront. Under UK law, delivery charges must always be included within the final sales bills. And once the deal is made, prices cannot be retrospectively changed.

Following Best Delivery Practices: Choosing the Courier

When selecting the courier to handle your business deliveries, you need to make sure that they always follow best delivery practices. Remember, when a customer buys from you, a contract between you and them is formed. This means there is a legally binding commitment for the trader to meet the standards covered by the delivery charges the customer has paid for. If you don’t meet these standards, it can be costly, leave you with a dissatisfied customer and ultimately damage your business reputation.

Picking the right courier is essential, as if the goods aren’t delivered on time or the package is lost, it is the trader who bears responsibility. Until the goods are in the consumer’s possession, the trader holds all the risk. So, as an online seller, you rely on the courier to deliver on the promise you made to the customer.

Other Things to Think About

As well as picking the best shipping option for you and picking the best courier, you should also consider:

  • Packaging – this can add weight to the product and increase costs
  • Insurance – this can add costs to courier fees
  • Unexpected delivery charges – such as customs fees, weight limits imposed by the courier and package losses

Hopefully you’ll find this information useful. For more in-depth information about delivery charges, head over to Business Companion’s new best practice resource for traders selling goods at a distance. The great, free advice will ensure you meet your commitments and always deliver the goods!

If you run a business, staying on the right side of consumer law is a key consideration. Take a look at Business Companion’s library of easy-to-understand guides on best trading practices. Written by consumer law experts and government-backed, it’s the best place to get the most relevant and up-to-date information on trading law for your business.


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