Let’s Talk about “Free Shipping”
As you already know, shipping is not “Free”. Not once when I walk into the post office, has the agent been willing to take and mail my packages without charging me. You know that as well as I knows that. HOWEVER, there is a perceived notion among Online Shoppers that they do not want to pay for an item to be delivered to them. They have the philosophy of…When I go to the mall, I do not pay to pick-up the item. Well. In reality, you do. You buy gas, pay a payment on your vehicle, pay for insurance, well, you get the idea.
The average online shopper is looking for the best deal that is available and to be a successful online seller, you need to realize this.
Now, as a seller, you probably are thinking like I did when I started online sales. I have to pay for shipping and so does my buyer. I did a study over a 90-day period and found that if I listed identical items, one with shipping being charged to the buyer and one with free shipping, the Free Shipping listing sold nearly 10x more. Not, keep in mind that when I did this, the final price, was identical.
Item One: Acme Wonder Lure Spinner – Price: $3.95 – Shipping: $1.32 = Total of $5.27
Item Two: Acme Wonder Lure Spinner – Price: $5.29 – Shipping: FREE = Total $5.29
Now, as you can see in the above item, I actually charged $0.02 more but offered free shipping. When purchased, the item with Free Shipping sold 10 to 1 without.
With this formula, shipping is STILL being charged to your buyer but they do not see that charge so they conceive that it is free.
With the new algorithm at eBay, using the Free Shipping option is very much so the way to go. Buyers can now sort items by Free Shipping and with the All Mighty DSR option; Free Shipping receives an automatic DSR Rating of 5 in that portion. So, long story short, your buyer is still paying the shipping, you are still getting the money for shipping, it is just the way that it is delivered ;0)
So What to I add to my price for Free Shipping???
On all of our User Id’s, we add the shipping to Zone 8 per the USPS chart to make sure that we still make a profit on our items. What does this mean you ask?
Mootsie Tootsie Shoes – Sale Price of $22.95
These shoes weigh completely packaged at 1 pound, 14 oz. So the shipping charges depending on the location would range from $5.00 - $9.55. To keep the profit that I need to clear on this item, I would add in shipping of $9.55 to my item. Now notice that I add the highest shipping fee so I would list these shoes at $34.95 to cover the highest possible shipping via USPS plus additional eBay/PayPal Fees. You can also take into account what UPS charges and your profit margin can go up.
Let’s Add in eBay and PayPal fees to these figures.
This is the figures with the BUYER paying for shipping outside the price of the item
No Store
Sale Price: $22.95
Shipping: $ 9.55
Total Paid by Buyer: $32.50
Shipping Cost: $ 9.55
Shipping Cost: $ 9.55
eBay Fees $ 3.25
PayPal Fees: $ 1.24
Total Received: $18.46
Basic Store
Sale Price: $22.95
Shipping: $ 9.55
Total Paid by Buyer: $32.50
Shipping Cost: $ 9.55
Shipping Cost: $ 9.55
eBay Fees $ 2.95
PayPal Fees: $ 1.24
Total Received: $18.76
Premium Store
Sale Price: $22.95
Shipping: $ 9.55
Total Paid by Buyer: $32.50
Shipping Cost: $ 9.55
Shipping Cost: $ 9.55
eBay Fees $ 2.80
PayPal Fees: $ 1.24
Total Received: $18.91
Let’s do the same figures with the buyer receiving “FREE” shipping with the price of shipping being figured into the price of the item:
No Store
Sale Price: $34.95
Shipping: $ 0.00
Total Paid by Buyer: $34.95
Shipping Cost: $ 9.55
Shipping Cost: $ 9.55
eBay Fees $ 4.69
PayPal Fees: $ 1.31
Total Received: $19.40
Basic Store
Sale Price: $34.95
Shipping: $ 0.00
Total Paid by Buyer: $34.95
Shipping Cost: $ 9.55
Shipping Cost: $ 9.55
eBay Fees $ 4.39
PayPal Fees: $ 1.31
Total Received: $19.70
Premium Store
Sale Price: $34.95
Shipping: $ 0.00
Total Paid by Buyer: $34.95
Shipping Cost: $ 9.55
Shipping Cost: $ 9.55
eBay Fees $ 4.24
PayPal Fees: $ 1.31
Total Received: $19.85
Now keep in mind, if your buyer lives in zones 1 – 7, your profit will be higher. So, as you can see from these figures, your profit CAN be higher when you figure in “FREE SHIPPING” for your buyer. Also remember to figure in any PowerSeller (5%) or Top Rated Seller (20%) discounts for a higher profit margin!
International Buyers
At this time, I would not recommend offering free shipping on International sales because the charges are all over the board. You can however, give your International Buyers, a discount on shipping to cover the shipping charges that you built into your prices. That is up to you and how you want to run your business!
Until Next Time, Happy Selling!
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