How Much Can I Charge for Shipping?

Gone are the days of offering free shipping across the board. You aren't Amazon, and your customers know that.

Instead of treating shipping as a cost to hide or minimize, use it strategically. Shipping can be a value add and an incentive to drive up average order value. But how much can you actually charge?

The answer isn't found in industry benchmarks or competitor research. It's hiding in your own data. And the only way to know for certain is to test.

Why Your Shipping Strategy Matters

Shipping isn't just a cost. It's a service customers will pay for.

The prevailing wisdom says keep shipping as low as possible. Hide the cost. Make it disappear. Free is best.

But customers don't hate shipping costs. They hate shipping costs that don't match the value they receive.

When you see shipping as a service rather than a cost, new questions emerge: What shipping services do customers actually want? How much are they willing to pay for different service levels? When does shipping speed matter more than shipping cost?

These aren't philosophical questions. They're testable hypotheses that could reshape your profit margins.

Different Shipping Rate Approaches

Most brands pick from a few common approaches, each with different tradeoffs

Free shipping: Either on all orders or above a threshold. Removes friction at checkout but means absorbing shipping costs into your margins.

Flat rate: Charge the same amount regardless of speed or distance. Simple for customers but means subsidizing expensive shipments and overcharging for cheap ones.

Carrier-calculated rates: Pass through whatever the carrier charges. Transparent and fair, but complex. Customers see different prices based on location.

Speed-based tiers: Offer Standard, Express, and Next-Day at different prices. Lets customers choose what they value but requires more setup.

Match competitors: Look at what similar brands charge and do the same. Easy benchmark, but optimizes for their business, not yours.

Within each approach, there's a bigger question: How much of the shipping cost do you pass to customers versus absorbing yourself? If you charge a flat rate, should it be $5, $7, or $10? This is often where the biggest profit wins come from.

How do you know what's working?

Most brands try one of these approaches:

Before-and-after comparison: Pick a date, change your rates, compare results. But you can't isolate shipping from other variables (competitor sales, seasonal changes, marketing campaigns).

Daily rotation: Charge $5 on Mondays, $8 on Tuesdays, compare performance. But days of the week have their own patterns that muddy your results.

A/B testing: Show different shipping rates to different customers at the same time. Same Monday morning, same weather, same everything except shipping price. This is the only method that isolates shipping as the variable.

How to Test What to Charge

Can your customers absorb more of the actual shipping cost?

For most brands, testing the shipping amount delivers the biggest profit impact.

Start here: Ask yourself

• What do you currently charge for shipping?

• What does shipping actually cost you?

• How much of that cost are you passing to customers versus absorbing yourself?

The Simple Rate Test:

If you currently charge $5 flat rate, test:

• Control: $5 (current)

• Variant A: $6 (+$1 more)

• Variant B: $7 (+$2 more)

If you currently charge $8 for express shipping, test:

• Control: $8 (current)

• Variant A: $10 (+$2 more)

• Variant B: $12 (+$4 more)

What to measure:

Focus on profit per visitor, not just conversion rate. Here's the equation: Profit per visitor = (Product margin + Shipping margin) ÷ Total visitors

Stop Guessing. Start Knowing.

Pull a representative and significant amount of your orders and calculate what shipping cost you versus what you charged. That gap reveals your opportunity.

Test incremental increases ($1-2 more) and measure profit per visitor. The data will show you what customers will actually pay.

Don't guess how much you can charge for shipping. Know.

Ready to discover what your customers will actually pay? When you're ready to know for sure, let's get you testing beyond what's typical.