How to Calculate Shipping Costs for Your Online Store in 2025

Your shipping experience can make or break customer satisfaction, just like your products can. While you want to delight customers with fast, affordable delivery, shipping costs can eat into your profits if you absorb them—or deter purchases if customers pay. Finding the right balance is key to your business success.

We’ll help you create shipping policies that work for both your business and your customers. With some upfront planning and clear communication, you can manage shipping costs while creating an excellent post-purchase experience—even when orders are literally out of your hands.

How to calculate shipping costs

Several key factors affect shipping costs for your online store. Understanding each one helps you make smart decisions about your shipping strategy:

Delivery speed

Want to get packages to customers lightning fast? Quick delivery comes at a premium. The faster the shipping speed, the more it costs—which affects your bottom line if you’re covering shipping costs.

Package value

When you’re shipping valuable products, you’ll want insurance to protect against loss, theft, or damage. The last thing you need is unhappy customers because of shipping mishaps.

Shipping distance

The further your package travels, the more you’ll pay for transportation. Combining distance with fast delivery gets especially pricey—overnight shipping across the country costs significantly more than local delivery from a nearby fulfillment center.

Package weight

Heavier packages mean higher shipping costs, since carriers have vehicle weight limits to consider. Every extra pound impacts the final price.

Package size

Size matters in shipping. Carriers use dimensional weight pricing for larger packages since bulky packages take up more space in delivery vehicles. A lightweight but large package might cost more than you expect.

Additional fees

The logistics world is full of surprises—from sudden road closures and natural disasters to worker strikes or unforeseen taxes. Building a buffer into your shipping budget helps you handle unexpected costs without stress.

There are also additional fees to consider depending on where you’re shipping to. If you’re shipping only within the US, you won’t need to worry about international fees or import taxes. But if you’re reaching customers worldwide, you’ll need to consider how each factor affects different shipping routes.

Calculate shipping rates with Shopify Shipping 

Shipping rate calculation comes built right into your Shopify store, making it one of the platform’s biggest advantages. Everything you need—shipping labels, inventory management, invoicing, customer details, and product management—lives in one place.

Customize your shipping options to match your business needs. Offer customers free shipping, flat-fee rates, or rates dynamically calculated by distance. Got a local customer base? Set up local delivery within your service area or offer pickup at your brick-and-mortar location.

If you don't have the time to think about configuring your rates, we’ve got you covered with Shopify Shipping. Here is what you get:

• Discounted rates (up to 88%) with USPS, UPS, and DHL
• Built-in label buying and printing—no special equipment needed
• $200 shipping insurance against damage, loss, and theft at no extra cost
• Time-saving features like bulk order fulfillment, scan forms, and carrier pickups
• Real-time package tracking to keep customers informed
• One simple monthly bill covering both shipping and your Shopify subscription

See how it’s helping other merchants succeed: “By using Shopify for postage rather than a regular post office, we are seeing, on average, a 30% discount on shipping rates,” says Jenni-Lyn Williams, CEO of SnarkyTea. “This saves us more [than] $305,000 in shipping costs per year.”

Calculating shipping costs with carrier calculators

If you’re working directly with shipping carriers instead of through Shopify Shopping, you’ll need to use their individual calculators. Here’s how each major carrier’s calculator works:

1. UPS

The UPS calculator offers detailed control over shipping options. While it’s more complex than other calculators, it can help you find the most cost-effective rates when you know your exact package weight and dimensions.

2. USPS

The United States Postal Service (USPS) keeps things simple—you just need a ZIP code to calculate shipping costs. Choose from preset flat-rate boxes or enter custom package dimensions for more precise rates.

3. FedEx

FedEx’s calculator works similarly to USPS. Enter your package weight, packaging type, destination, and shipping date to see costs for different delivery speeds.

4. DHL

While DHL is a major player in international shipping, it handles quotes differently. Instead of an interactive calculator, you’ll request a custom quote through its website. You can move forward with shipping as soon as you receive your quote.

Choose your shipping options

Free shipping

About 70% of online shoppers abandon their carts—and extra costs like shipping and taxes are the main reason why, according to research from Baymard Institute.

Free shipping can help prevent abandoned carts. Consider setting a minimum order amount to qualify for free shipping—this helps offset your costs while encouraging larger purchases. 

Real-time carrier rates

With Shopify Shipping, you can show customers live rates from carriers like USPS, Canada Post, and UPS. This lets customers choose their preferred delivery speed while seeing actual costs based on their order.

Real-time rates can save you money since some shipments cost less than a flat rate. Plus, customers who need faster delivery can easily select and pay for expedited shipping. 

Flat rate shipping

Flat rate shipping works well if you:

• Sell products of similar sizes and weights
• Have a single product line
• Want to keep shipping simple

However, flat rates get complicated if you sell items of varying sizes and weights. Make sure your flat rates don’t overcharge or undercharge customers.

Local delivery

Local delivery gives small businesses, especially those with physical stores, a competitive edge. You can:

• Offer next-day delivery to nearby locations using your own means or local carriers
• Build stronger relationships with local customers
• Provide free or low-cost delivery above a spending threshold—just bear in mind that most local carriers (e.g. Uber Eats) take a cut out of your profit margins

Set up local delivery by creating a radius around your location or choosing specific ZIP codes. With this shipping method, customers within your delivery area will see this option at checkout.

Create a shipping policy page

Your shipping policy or FAQ page helps customers find answers quickly and make confident purchase decisions. In fact, 68% of online shoppers check shipping policies before buying, according to UPS research.

Create a new page on your store and add it to your footer menu. Include clear information about:

• Order tracking
• Shipping options and delivery times
• Returns and refunds process
• International shipping availability and customs
• Lost or damaged package procedures

While specific policies depend on your business and products, having this information readily available helps prevent common customer questions.

Common shipping questions

A clear shipping page helps customers find answers quickly. Here are the questions you’ll most likely need to address:

How do I track an order?

After purchasing, customers have one main concern: When will their order arrive? Clear tracking information reduces follow-up questions from eager customers.

Make tracking easy by:

• Adding tracking numbers to all fulfilled orders 
• Offering ePacket tracking so customers can check status themselves
• Showing tracking details where customers look first: order confirmation emails and your Order Status page

Remember that customers messaging about tracking might feel uncertain about their purchase. A quick, empathetic response can turn their concern into confidence.

📌Pro tip: Using Shopify Shipping in the US or Canada? Tracking comes included with most carriers. When you buy a shipping label, your customer automatically gets their tracking number by email.

How do I return or refund an order?

Returns are a normal part of ecommerce—typically around 20% of orders, rising to 30% during holidays. A clear return policy helps both you and your customers navigate this process smoothly.

Your shipping policy should explain:

• Return shipping costs (whether free, flat-rate, or exact cost)
• Available options (returns, exchanges, or both)
• Step-by-step return process

Most carriers offering return shipping labels include:

• USPS
• FedEx
• UPS
• DHL
• Canada Post
• UK Royal Mail
• Australia Post

📌Pro tip: US-based Shopify merchants can create USPS return labels for domestic orders right from the order page. Have a UPS account? You can print their return labels too.

Are your packages insured?

While shipping issues might not be your fault, they’re still your responsibility. Package insurance helps protect both you and your customers.

Many premium shipping carriers include insurance:

• USPS Priority Mail and Priority Mail Express
• Canada Post Priority or Xpresspost

For other shipping methods, you can add insurance for about a few dollars per $100 of declared value. If something goes wrong, you can file a claim to recover costs.

Tips for handling shipping issues:

• Talk to customers to understand what solution would work best
• Offer replacements or refunds for lost or damaged items
• Include packing slips to help packages reach their destination if shipping labels get damaged

What happens if my order arrives late?

While you can’t prevent every shipping delay, you can plan ahead to handle them smoothly. Here’s how:

• Choose shipping services with delivery guarantees, like USPS Priority Mail Express, which offers refunds for late deliveries
• Clearly state your late delivery policy on your shipping page

Consider offering compensation like store credit or discounts on future orders, even when delays aren’t your faultFor example, Midori Bikinis’ shipping page shares information on common shipping issues, including their fairly common policy that it can’t refund or replace lost packages outside of a specific insured mail class.

Do you offer faster shipping options?

During busy seasons and holidays, customers often need expedited shipping. Meet their needs by:

• Adding premium shipping options at checkout
• Displaying all shipping speeds and prices on your policy page
• Using an announcement bar to highlight fastest delivery options

If you’re getting frequent questions about shipping times, you might need to make your options more visible. Create saved email responses about shipping times to handle common questions quickly.

When customers ask about specific delivery dates, be honest about what’s possible. Look for compromise solutions that work for both sides, but try to stick to consistent policies to keep operations running smoothly.

How do you handle international orders?

Shipping internationally opens new markets but requires understanding customs and taxes for each country. Here’s what to consider:

• Start with a few target countries and learn their shipping process
• List available shipping destinations and options clearly on your store
• Include a disclaimer about customs duties and taxes
• Explain who’s responsible for additional fees
• Consider adding detailed information for countries where you ship frequently

Do you offer gift options?

Gift services can boost your holiday sales without requiring discounts. While they take extra time and resources, gift wrapping typically boosts your average order value, bringing a 50% profit margin per item—and can help convert shoppers looking for a complete gift-giving solution.

Shopify ecommerce merchants can add a gift-wrap option to their cart page or use an app like Gift Wrap Plus.

Additional shipping-related costs to consider

Shipping expenses go beyond carrier rates. Here’s what else to budget for:

• Packaging materials: Protect your products with appropriate packaging—shipping boxes and mailers, cushioning materials (bubble wrap, packing peanuts) and tape and labels. Buy packaging supplies in bulk to reduce costs. 
• Packing inserts: While promotional materials and freebies can enhance the unboxing experience, these extra assets add production costs and may increase package weight and box sizes. Consider testing different insert combinations to find the sweet spot between customer experience and reducing shipping costs.
• Fuel surcharges: Carriers often add fuel surcharges to cover fluctuating costs. These costs typically increase during holiday periods to account for high demand.

Integrate shipping costs into your pricing

Free shipping strategies

While many customers won’t buy unless shipping is free, it’s never truly free—either you or your customer needs to cover the cost.

Minimum order threshold

Setting a minimum purchase amount for free shipping can be highly effective. When customers see they can get free shipping by adding a few more items, they often spend more to avoid shipping fees. This higher order value helps offset your shipping costs, though you’ll still need to cover shipping for orders that meet the threshold.

Built-in shipping costs

Another strategy is to build shipping costs directly into your product prices. For example, if you’re selling a product for $15.99 and shipping typically costs $3, you could add a third of that fee to the product price. The item would now retail for $16.99, with the extra dollar covering part of the shipping cost.

This approach comes with both opportunities and challenges. On the plus side, you can recover shipping costs predictably and might even make extra profit on multi-item orders. For instance, if you can ship five units in the same $3 flat-rate box but have added $1 for shipping onto each unit’s price, you’ll earn an extra $2 in profit.

However, building shipping into your prices means charging more for individual products, which could affect sales if price is a key factor for your customers. You’ll also need to consider how discounts might impact your margins——a 20%-off promotion could cut into the portion you’ve set aside for shipping costs.

Choose the strategy that best fits your business model and customer expectations. Many successful stores use a combination of approaches, like built-in shipping costs for lower-priced items and free shipping thresholds for larger orders.

Test and adjust your shipping strategy

Break down your shipping costs

Understanding your current spending helps you find savings opportunities. Review your shipping costs by examining:

• Your shipping distances: Sometimes relocating inventory makes sense. If you’re spending thousands shipping to EU customers, using a local fulfillment service could reduce both costs and carbon emissions.
• Package sizes and weight: With flat-rate shipping, you pay the same price for packages within specific size and weight limits. Test different box sizes to find the smallest option that still protects your product during transit.
• Volume discounts: Has your order volume grown? Contact your carriers about bulk shipping discounts—many offer better rates for high volume shippers. 
• Packaging materials: Light materials like foam or non-corrugated cardboard can lower weight-based shipping costs while maintaining product protection.

Learn from customer feedback

Every customer conversation is a chance to improve. When asking for shipping feedback, use friendly language and frame it as helping your business serve them better.

If a customer isn’t happy, you might save the relationship with free shipping or store credit. Even if you can’t save that sale, use what you learn to prevent similar issues for future customers.

Refine your strategy with data

Use your findings to fine-tune your shipping approach. For example, if customers frequently mention slow delivery times, you might need to highlight your free shipping threshold more clearly.

Pay attention to patterns in your cost breakdown too. If your bestsellers typically fit in a specific box size, save those box measurements in your Shopify admin to keep fulfillment consistent and efficient—no matter who handles the packing.

Fine-tune your shipping process

Success in shipping comes down to two key strategies: prepare and iterate. Create your policies before you need them, when you have time to think through what works for your business, products, and budget.

Then stay flexible. Real customer questions often reveal ways to improve your policies. Each shipping question gives you two opportunities: solve the customer’s immediate need and make your shipping policies better for everyone.