Thoughts On Adding Shipping Charges

Thoughts On Adding Shipping Charges

by Donna Bayes

I'm sure there could be a lot of debate on this issue. Should I? Or shouldn't I? I have personally given it a lot of thought, and this is where my thinking is at the moment.

I see two issues under this topic. The first issue is whether to charge shipping to cover the cost of the $7.95 per MK order from the company. Again, I have always considered it a cost of doing business. However, that was before it rose to $7.95, and before we had the option of the Earned Discount Privilege. I have been observing the orders being placed by consultants in my unit. Many are taking advantage of the EDP, and are placing their initial $200 WS early in the quarter when the new order form comes out and then are placing small orders throughout the life of the order form. The EDP has allowed consultants to order the products that they didn't have on hand without having to frantically search and trade with another consultant. It has allowed consultants to be responsible for their own inventory. However, the $7.95 freight charge can add up and cut into the profit.

I played with some numbers and feel like it is appropriate to add a shipping charge to each order so that the freight charges are recouped by all the customers purchasing the products from each order. It seems that a reasonable average WS order for a consultant using the earned discount privilege is $75 WS. Many orders will be larger and some will be smaller, but $75 WS was a consistent number as I observed ordering patterns.

The retail on $75 WS is $150. If you divide the shipping charges by the Retail amount, you would have $7.95 divided by $150, which equals approximately 5 cents per $1.00 spent. My proposal is this:

$ Spent	Shipping Charges
$1-$10	$0.50
$11-$20	$1.00
$21-$30	$1.50
$31-$40	$2.00
$41-$50	$2.50
And so forth, adding 50 cents per $10 in orders.

Consider all the other companies and home parties from which you order. I can't think of any that I wasn't charged a shipping fee, and in most cases, it was much more costly than this.

I feel this is reasonable for the consultant trying to make a profit using the EDP. If you begin putting this small fee on each sales ticket, your customers will soon not even notice it and you will be making your full profit on the product sold.

The second issue is whether to charge shipping if you mail an order to a customer. For years, I never did. I absorbed postage as a cost of doing business. About two years ago, when a few customers automatically added my cost of postage to their checks, I began to rethink this issue. I thought of all the shipping charges I paid when I ordered something from a catalog or online. I was paying more than shipping charges; I was also paying handling charges. I thought about the cost of postage as it continually increased. And I thought about the feight of certain orders vs the cost of the product and realized that many times most of my profit was being eaten up by the cost of postage (and handling--driving to the postoffice, packaging materials, etc). Consider the weight of a Deep Cleanser, with a profit of only $5.00. The cost of mailing that one product is $2.44, plus packaging.

I decided to begin charging postage. To make it easy, I began using Stamps.com so that I could weigh the package and figure postage and add it to the invoice before I even printed it on Boulevard. If the order is over $60 or $70, I usually give free shipping. Even then, many of my customers add it to their checks if I "forget" to.

My fear was that I would lose the customers because I was charging postage. But, in fact, I have lost no one. I believe the convenience of receiving the product promptly in the mail, after ordering online or over the phone on my toll-free number, must be worth it to my customers, and they have remained loyal and haven't gone to another consultant local to them.