Wednesday, September 28, 2011

Sellers - Shipping Costs More Than You Think!

Two years ago I started selling actively on okay. Up until then I had only sold occasionally. The first year was pretty successful - I certainly did better than I had hoped. I always added a small percentage to cover the incidentals associated with shipping. Overall I was pleased with what I achieved that first year.
Because the first year went well I took the plunge and registered the business last year. Now I had kept track of costs the year before for tax purposes obviously, but as the business was now registered I used accounting software for the first time. What an eye-opener! There I was thinking I had covered all my costs the year before but in fact I wasn't even close. By the end of last year my shipping costs exceeded my shipping ingee by some $200. Not a fortune maybe, but it came from my profits. So why the deficit? All the little things that I hadn't costed properly.

Bubble wrap - Many things I ship are fragile so bubble wrap is a must.
Boxes - I only use new boxes and although (with some exceptions) they're not too expensive, the delivery charge due to weight adds roughly $1 per box.
Envelopes - Smaller items get shipped in envelopes. I use maybe 150 per year.
Gas - My nearest shipper is 5 miles away so every time I ship (3 to 4 times per week) it's 10 miles of gas.
Packing tape - If you ship bigger items like I do you will use yards of the stuff - far more rolls than you might think.
Sharpies - I use 5 or 6 per year. Not a lot maybe but still several $ worth towards that deficit.
Return address labels - Whether you print your own or buy ready made they add up.
I have seen many buyers geplain in the discussion boards that they paid $2.85 (or whatever) for shipping and the cost was only 60 cents according to the postage. The postage is far from the whole story obviously or I wouldn't have been out of pocket.
I am sure there are many small business sellers out there - particularly ones who are not registered businesses and so aren't doing true book keeping - that have fallen into the same underpricing trap that I did. To truly succeed in the market place make sure you cover ALL your shipping costs.

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