profitabilitycost-analysispricing
Shipping Cost Allocation and Profitability Analysis
Understand true shipping costs and their impact on product profitability.
January 9, 20262 min read18 views
Shipping Cost Profitability Analysis
Know your true costs to price correctly.
Cost Components
| Component | Typical % |
|---|---|
| Carrier rate | 60-70% |
| Packaging | 10-15% |
| Labor | 15-20% |
| Supplies | 3-5% |
| Returns | 5-10% |
Product-Level Analysis
| Product | Revenue | Ship Cost | Margin |
|---|---|---|---|
| Product A | $25 | $5.50 | $19.50 |
| Product B | $25 | $8.50 | $16.50 |
| Product C | $25 | $12.50 | $12.50 |
Zone Impact
| Zone | Avg Cost | % of Orders |
|---|---|---|
| 1-2 | $5.50 | 25% |
| 3-4 | $7.50 | 35% |
| 5-6 | $10.50 | 30% |
| 7-8 | $14.50 | 10% |
Free Shipping Threshold Math
| Scenario | Details |
|---|---|
| Avg order value | $45 |
| Avg shipping cost | $7.50 |
| Gross margin | 45% |
| Break-even threshold | $50 |
| Recommended threshold | $60 |
Pricing Strategies
| Strategy | Best For |
|---|---|
| Free over $X | Increase AOV |
| Flat rate | Simplicity |
| Exact cost | Transparency |
| Built into price | Psychology |
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