Why Businesses Should Review Shipping Costs vs. Charges Every Quarter

When you’re running an eCommerce business, there’s a lot to juggle—inventory, marketing, customer service, fulfillment—the list goes on. It’s challenging enough to keep up with the day-to-day operations, however, this may lead to certain business pieces running without the attention they need. One often-overlooked expense is shipping, and it might be impacting your profits and customer satisfaction.

The price you charge customers to ship their order might not cover your actual cost to ship it. So, what do you do? Review your shipping costs consistently! To maintain a profitable online business, you should review your shipping costs and adjust fees accordingly.

Learn more about why it’s important to review shipping costs regularly and how to stay on top of it.

Shipping isn’t static. There are many factors constantly affecting shipping rates. Carriers adjust their destination rates, fuel surcharges shift, the average weight and dimensions of your packages change, or you might be running your annual promotion.

If you don’t consistently review your shipping data, your business could be suffering from:

• Profit Erosion: Your business may be eating shipping costs without realizing it. You may be happy to see customers placing orders, but you won’t be happy when you realize you are footing the bill to ship them.
• Cart Abandonment: Customers are super sensitive to unexpected or high shipping fees. When they see a hefty shipping fee at checkout, you are inviting them to abandon ship to see out a better deal elsewhere.
• Missed Opportunities: You may be offering free shipping on orders when flat-rate or tiered shipping would increase margin without hurting conversions.

Many e-commerce owners set up shipping rates when they launch, never to revisit the rates, and it is costing them.

Shipping costs change quickly. Let’s say your average shipping cost per order has gone from $7.50 to $9.20 over the last few months. If you’re still only charging $6.95 at checkout, you’re losing $2.25 per order. Multiply that by 500 orders per month, that’s $1,125 out the door—every month.

On the flip side, if you’re charging $12 for shipping and the real cost is only $7, that $5 discrepancy could be causing your customers to abandon their carts, resulting in orders you’ll never see.

To analyze your shipping costs, set aside time at the end of every quarter (or set up an automated report) to answer these four questions:

1. How much am I paying?

Review your shipping software or carrier invoices to figure out your actual shipping cost. Look at:

• Average cost per order
• Cost by region or zone
• Cost by product category or weight

2. What do you charge customers to ship their order?

Are you charging a flat rate? Tiered rates? Free shipping over a certain threshold? Compare the price your customer pays for shipping to your actual cost to ship.

3. Have box sizes or order sizes changed?

Evaluate packaging and order trends and adjust backend shipping dimensions and weight, or rethink how you sell and send out orders.

• Have you changed box sizes (shipping dimensions) or packaging materials (shipping weight)?
• Are customers bundling more items in one order?

4. Carrier Changes

UPS, FedEx, USPS, and DHL all make annual pricing updates—often in Q1. Make sure you’re aware of their pricing changes so you can adjust shipping costs accordingly.

Take advantage of automation and analytics:

• Shipping Management Platforms: ShipStation, Pirate Ship, Shippo, and EasyPost can help you compare real-time carrier rates and analyze historical shipping data.
• eCommerce Platforms: Shopify, BigCommerce, and WooCommerce often have shipping analytics plugins and apps that can simplify the review process.
• Google Analytics: See if users are dropping off at the shipping page during checkout—this could point to shipping charges that are too high or confusing.

Take advantage of automation and analytics:

1. Audit Quarterly: Set a recurring reminder to check your shipping spend and compare it to your customer charges.
2. Adjust Your Strategy: If needed, modify your shipping rules—flat rate, weight-based, or even free shipping over a certain spend can all be effective with the right margins.
3. Test and Monitor: Consider A/B testing shipping offers or thresholds, and track conversion rates to see what resonates with your customers.

Shipping can either be a silent profit killer or a competitive advantage—it all depends on how often you check in.

For eCommerce businesses, staying proactive with quarterly shipping reviews is a smart, data-driven way to protect your bottom line and keep your customers happy. Don’t wait until year-end to discover a hole in your profitability.

Block 30 minutes each quarter to run the numbers—you’ll thank yourself later.