Postage Costs

We get a lot of feedback around postage costs. Whether or not they are fair, and what to include when calculating the postage costs to charge customers.

We have also had feedback from people saying that they had either been charged unfair postage costs when buying an item, or small businesses saying that they had received complaints.

What to Include

Postage Costs

Firstly, the actual postage costs need to be charged back to the customer. This can be either as a separate charge, or included in the item cost.
You can look up how much something is going to cost by using something like the Royal Mail Price Finder. However, it’s worth remembering that Royal Mail isn’t always the cheapest way to post an item – especially larger parcels.

Postage Costs

Parcel2Go is a great tool to look at whether there is a cheaper way to post your parcel.
For example, a 3kg shoe box sized item would cost £13.14 to post to mainland UK using Royal Mail’s Parcelforce Express48 service (as at Jan 2020). Compare this to just £5.76 using InPost48 via Parcel2go. For £6.30 someone from Hermes would even come and collect it – saving you the trip to the post office or ParcelShop.
Parcel2Go also offer Parcelforce services at a cheaper rate than the Post Office (£from £9.66 in this example) so shopping around will save you money.

Be wary, of course, as there have been quite a lot of instances of parcels being left in precarious places, so if you are sending something valuable, it’s worth looking for a signed-for option. Even so, a potential saving of up to £7.38 isn’t to be sniffed at.
You also need a printer for some of the postage options so check that before you buy anything online.

When I first started a reselling business about 10 years ago I was posting everything via Royal Mail. They then brought in new rules about costs of small parcels and my postage costs doubled from £3.15 to £6.30 overnight. This put me out of business as I had included all of the postage costs in the price of the items I was selling.
So it’s worth considering how an increase in postage costs could impact your business in the future.

Packaging

Packaging is another cost that you as a small business owner have to incur whenever you are posting out your orders. We all like to buy pretty packaging to send our orders – something Instagrammable perhaps. But the cost of this all adds up. The size of the packaging can also have a big impact on the postage costs so bear that in mind before you fork out on beautiful hamper boxes which might end up being 1cm too big for cheaper postage costs.

Size can affect postage costs massively

If you are looking for a really cost-effective way of packaging your orders, check out AliExpress for supplies.
Something like these Pink Jiffy Bags or these Flamingo Mailing Bags can brighten up any order for less than 25 pence each. A lot of items here have free or low-cost postage costs, but they can take a few weeks to arrive so factor that in.
If your order value is below £15 then you will pay no VAT. If your order is below £135, then you will pay no Customs Duty – although check the HMRC website for any changes to these rules.
They also sell loads of really cute stickers and ribbon here too – all at really reasonable prices, so check it out.

Or how about this really cute coloured twine to secure your packages.

Any cost for mailing bags, boxes, bubble wrap, stickers etc. should be calculated as a per-order cost and added to the postage costs. Even if it is pennies.

If you are printing out labels, make sure you are including the cost of paper, ink and electricity for your printer. It might seem really petty, but even three or four pence per item can add up.

Time

Cost of Time

You should be working out how much time you spend sourcing and ordering your packaging, and add that on.
For example, if you spend 10 minutes sourcing and ordering 100 mailing bags, if you are paying yourself £10 an hour, that’s around 2 pence you should be adding onto each order. It might not sound like much, but it all adds up.

You should also add on a cost for the time it takes for you to package up your items to post – as this is time you could be spending on making your items or marketing them. Or even selling at craft fairs. If you are spending 10 minutes packaging it up to make it look really pretty, that’s £1.67 of your time so you should ask yourself if that’s worth it.
If you are anything like me, I’ll end up faffing and spending ages making it all look absolutely perfect. Calculating the cost of your faffing time should help you reduce it a little!

Finally, if you are spending time taking your items to the Post Office to post, then that time and any associated costs (petrol, bus fare, etc.) should be included. When you are first starting out, you might end up making a round trip to the post office to post one single item. It’s not practical to charge someone £5 for a half-hour trip, but bear in mind that it’s costing you that much in time alone. This isn’t sustainable for a small business so you should be aiming to perhaps make one trip per week to bulk post if that is viable for your business. Alternatively you can look to tag the trip onto another trip that you would already be making (dropping the kids off at school, or going on your way to the supermarket, perhaps) to reduce the cost to you. You can also look into the Parcel2Go options of home collection services if that can work for you.

Author: yvettie86

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