How to Calculate Your Shipping Fees
Your order is ready and packaged to go, and that’s when you remember to calculate your shipping fee? You’re doing it wrong. If you’re dropshipping, you most definitely will sell at a loss.
Here’s how to do it right:
- Get all the details ready beforehand from your supplier and your shipping agent.
- Calculate your shipping cost and extra fees.
- Factor these fees into the cost of the product before making a sale.
Whether you’re shipping by air or sea, we’ll guide you with easy-to-understand steps and practical examples to ensure you don’t lose money or make less money on your next sale.
How to Calculate Sea Shipping Costs To calculate the cost of shipping your package by sea, you'll need two things:
- The price per cubic meter (from your shipping agent).
- The size of your package (from your supplier).
Price per cubic meter (CBM) This simply refers to the cost of shipping a package that takes up one cubic meter of space. It usually varies by location and by the shipping company.
For instance, it may cost $100 per cubic meter to ship a package from London to Nigeria when using shipping company A. For shipping company B, it may cost $200 per cubic meter to ship the same package from London to Nigeria. In a different scenario, like shipping the same package from China to Nigeria, the price per CBM would also be different.
Size of Your Package Since shipping companies only bill a package based on its size in cubic meters, you must ensure that the size of your package is in cubic meters.
Here's how to calculate the size of your package in cubic meters using the length, height, and width of your package:
- Get the dimensions of your package, that is, the height, length, and width, from your supplier.
- Convert these dimensions to meters if they're in centimeters (cm) by dividing by 100.
- Multiply the three dimensions to get the size of your package in cubic meters.
With the size of your package in cubic meters, calculating the cost of shipping your package is easy. Simply multiply the size of your package by the price per cubic meter.
Calculate like Precious Precious just ordered a set of skincare products from South Korea. Her shipping agent charges a fee of $100 per CBM and the dimensions of her package are L = 100cm, W = 50cm, H = 80cm.
To calculate the cost of shipping by sea, Precious first converts the three dimensions from centimeter to meter and then multiplies them together.
L = 100/100 = 1m W = 50/100 = 0.5m H = 80/100 = 0.8m
1 x 0.5 x 0.8 = 0.4m³
She proceeds to multiply the size of her package in cubic meters by the price per CBM.
0.4m³ x $100 = $40 ≈ ₦61,470
Finally, she converts to the Naira equivalent to know exactly how much she’d budget for shipping fees.
How to Calculate Air Shipping Costs To calculate the cost of shipping your products by air, you only need two things:
- The weight of your package (in kilograms).
- The price per kg (from your shipping agent).
Multiply both values and you'll get your shipping fee.
For example, for a package that weighs 10kg and with an agency shipping fee of $1 per kg, your shipping fee will equal $10.
Conclusion Whether you opt for sea freight or air freight, understanding these calculations is paramount to any business owner.
By obtaining the necessary details from your supplier and shipping agent, you can easily apply the formulas and accurately predict your shipping expenses beforehand. This approach will help you avoid selling at a loss and maximize your profits.
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