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How much should I charge for P&P?

Setting the right postage & packaging (P&P) charges can help you make more sales online. Here's our quick guide to help you get it right first time.

Expensive P&P is one of the biggest reasons for abandoned online shopping carts.

So it pays to work out fair and accurate postage and packaging costs that also make business sense.

Here are a few tips to help you avoid this pitfall and have happy customers returning time after time.

Charge for P&P – and nothing else

Most people know the latest postage costs, and if they don’t, it’s very easy to check. Be transparent about your costs, price fairly and reap the rewards.

Give customers a choice of service

Some customers will be happy to pay more for faster dispatch, while others aren’t in a rush. Where possible, let the customer choose the service they want – and if it’s not possible, think about how quickly customers might want their products, and if they might prefer to pay a premium for a fast turnaround.

Choose a model for your P&P

There are three main ways to model your P&P – flat rate, per item and ‘free’ (included in the item price). You could even find ways to blend these approaches, for the one that perfectly fits your business.

Make sure that whichever approach you take, you are consistent - so your regular customers know what to expect from you.

1. Flat-rate

This approach is great for packages that are often the same sort of size and weight.

Set one cost for postage and packaging. It’s a less time-consuming option, since you don’t need to weigh each product individually.

You need to work out the average weight and size of your products, which in turn gives you an average cost of postage and packaging.

Pros:

  • Less time-consuming
  • Easy for customers to understand
  • Creates familiarity with your brand

Cons:

  • Doesn’t allow for discount postage  - which can be an incentive to buy
  • Assumes that most of your products are roughly the same size and weight - if heavier, bigger products become more popular, you could lose money and smaller items may have unreasonably high postage costs

2. Product-by-product

Giving each of your products their own P&P costs takes more time, but it does mean that every product you sell is delivered to the customer at cost.

You’ll need to invest in a good pair of scales that give you accurate figures – bathroom ones can be unreliable.

Pros:

  • Accurate postage costs for each product
  • Fair postage for smaller, lighter products
  • Each product sold at cost, so you don’t need to balance out gains and losses

Cons:

  • Can be confusing for customers
  • Takes up a lot of time to weigh every product
  • The cost of P&P could jump dramatically between two products close to each other in terms of size and weight

3. Free postage

Giving your customers free postage is a type of flat-rate, and one which customers love.

It’s an attractive, consumer-friendly option – but make sure your business can sustain it.

Crucially, you need to think about whether your pricing structure and the potential increase in sales will cover your P&P costs.

Pros:

  • Customers look for it and it can help reduce shopping cart abandonment
  • You can mark up the price of the product to cover some or all of your costs
  • Free postage for a fixed period of time can be a great nudge to customers to complete their purchase

Cons:

  • Can be a problem if bigger, heavier products become more popular
  • Offering free P&P all the time lessens its impact, as opposed to offering it occasionally as a special treat
  • You may need to balance out free postage with a slower dispatch time

Picking a Royal Mail delivery service

The Royal Mail’s new Small Parcel range means it’s easier to work out your costs.

Whatever size parcel you need, it’s a good idea to combine it with a delivery service that covers you should something go wrong.

You'll know when your customer has received their product with Signed For delivery - this is especially useful if your customer says they haven't received it.

Cover any lost or damaged products with the right level of compensation. The more expensive the postage costs, the higher your level of compensation will be.