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Price / Shipping Ratio

29 May

shippingI hate to ship my pieces. Hate it! I’d rather sand by hand – heck, by cabinet scraper.

I hate trying to find a box the right size, correct packing material, wrapping the item – ugh!

Rant = over.

Shipping is part of this game of being a professional woodworker, if you are making pieces to be sent all over the United States. We’re lucky that we have such a large audience; 20 years ago, before e-commerce became mainstream, you’d either be doing local only work, or taking out ads in national print media. Today, we can literally have a customer anywhere there is an internet connection, a shipping address, and a buyer. We’re blessed in that regard.

Shipping is a devil we have to deal with. However, not only is there the physical issue of shipping – the boxing up, the shipper, and so on – but the cost associated with shipping and the potential buyer. Maybe you never though about it that much, but shipping cost can make or break a sale.

Let’s role play here a little bit. Let’s say you are interested in buying the exact same table from either guy A or guy B. Guy A’s price for the table is $900, and his shipping charge is $100. Guy B’s price is $750 for the table and $250 for  shipping. Assume that both tables would be coming from just about the same distance, and using the same shipper and shipping time. Just based on a quick gut reaction, which guy do you think you’d go with?

I’m guessing guy A – the table is $900, and his shipping charge is $100. Was I right? If I was (and I bet I was) why was I right?

Because you didn’t want to pay more for shipping – which you really feel little perceived value from. People don’t want to pay anything for shipping – or very little. How many times have you been tempted to buy a product because there was free, or cheap, shipping? That’s why you chose guy A, because you wanted to pay the least amount for shipping – even the total price you’d pay either guy would have been the same – $1000.

The take-away here is don’t charge for actual shipping price (in most cases). Especially if you are making bigger pieces like a coffee table, or larger. Once you box or crate that puppy up, you’ll be charged by dimensional weight, used in shipping and freight, which is a billing technique which takes into account the length, width, and height of a package. Weight has little to do with it. Don’t believe me? Look up rates for a 40 pound package going from NY to LA, ground rate. Never mind I did it for you! A one foot square box would cost about $65; a box 43x33x23 would cost $281!

So what to do then? Build the cost of the shipping in – at least in part. Guy A above has it about right, in my estimation, 10% of the price of the piece. It’s fuzzy math, to be sure, and other things must be taken into account – the cost of the piece, the size of it, actual shipping cost – but what you don’t want to do is scare off a customer to a sale because of a high shipping cost. People understand that for furniture, it’s going to cost some coin to ship it; but they will get turned off to the idea of buying from you if shipping – a low perceived value service – is too high.

Final word – build in a large part of the shipping cost into the price of your work, and charge a lower shipping price. 

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2 Comments

Posted by on May 29, 2014 in BlogNotes

 

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2 responses to “Price / Shipping Ratio

  1. Dave & Sharynne Wilder

    May 30, 2014 at 8:46 am

    Agreed: it’s just good business sense.

     
  2. woodchuckerNJ

    May 30, 2014 at 10:29 pm

    Makes perfect sense, and no matter what you do there are preparation costs, even if they pick it up, so move some of those costs into the price. You have to prepare it to ship whether it’s local or not. Restrain drawers, shelves, doors, etc. Pack up hardware.. so what you are saying is just incorporating and expanding those into the price…

    Smart..

     

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