Pricing International Shipping for Customers

Selling internationally is a wonderful way to expand the borders of your online store, but how do you stop international shipping from breaking the bank. Our partners from ShipStation offer their advice.

Starting to sell internationally is a great way to grow your business and increase sales—that much we all know is true. Choosing the right products, making sure you speak the language and knowing your options is the start to getting more sales from more places. But to sell internationally, you also have to ship internationally, which can get expensive. Blindly pricing your international shipping options for your customers is a sure way to lose money. Here's how to not lose your hat when shipping internationally.

1. Research your options. There are a lot of different ways you can send your products overseas, including a number of different carriers. If you'll be sending only a few things, USPS Priority Mail International is probably your best option. The flat rate boxes they offer are a great way to relatively cheaply send things under 20 lbs. across the pond. If you plan on shipping a lot of things overseas to specific countries, leveraging the regional Fulfillment by Amazon locations (Canada, United Kingdom, Italy, etc.) may end up being cheaper than shipping and warehousing your products yourself for international orders.

2. Find your average cost. Knowing how much something costs you can help to make sure you don't under- or over-price your shipping options for your customers. While your international customers are going to expect to pay more in shipping, that doesn't mean they don't still want to best deal available. Take your average domestic order, and price it out with a rate calculator to the different countries for which you sell. Then take your smallest and largest orders you've gotten and price how much it would cost to ship those as well. This will give you a good idea as to where your shipping cost will usually lie, and will form a base for how you want to price your shipping costs.

For instance, if your smallest-ever order costs you $2.35 to ship overseas, your largest-ever costs $128.30, but your average order is only $13.29, you may want to go with a pricing structure (see #4) that supports a large number of different shipping costs. However, if your lowest is $1.10 and your highest is $2.35 with your average order costing you $2.35, a flat rate may be your best option. (For those wondering, the single-digit costs are for First Class Mail International Letters.)

3. Decide who's paying import taxes & fees. When shipping overseas, there's import taxes and fees associated with the shipment. As the seller, you have the option to pay for those yourself or have the buyer pay for them. Obviously the nicer thing to do is take those on yourself, though international buyers are accustomed to paying for them.

4. Determine the structure of your shipping prices. Depending on how you've priced your domestic orders, this one will probably follow the same structure. There are three basic ways to price shipping:

  • Free Shipping: This option is probably a bad idea for you to use for shipping internationally, since the cost for the service is much higher than shipping domestically. Even if your profit margins are high enough to cover the costs you determined earlier, you'll likely eat more cost than is necessary.
  • Flat Rate: If you have a fairly constant rate for your international shipments—most of your packages are the same weight/size, and the price change among countries isn't drastic—this is a very simple, cost-effective route to take for you and your customer. By choosing flat rate international shipping, you always know how much to charge as you add-on new shipments and your customers are aware of how much it'll cost them to get their item without having to use a calculator.
  • Calculated Rate: If your products are a bit more variable in size and weight, it may be a good idea to have your customers calculate their shipping rate when checking out. With this, you do actually have to additional options: to give your customers the rates you get, or mark them up. Luckily, Volusion makes it easy for you to setup live shipping rates in their system with your negotiated rates, and doing so will be a customer service win. The latter may net more revenue from each order, but you may lose some orders entirely if it falls into what your customers may judge as "high-cost".
5. Never stop testing. The key to success in eCommerce is testing. The environment and meta—standard practice across the majority of retailers—of doing business online is always changing, and so must you if you want to keep up with the rest of the crowd. As prices of shipping change, you'll have to revisit your pricing strategy to make sure you're still on target with your goals. Testing promotions and price changes may help to increase your conversion rate, as well.

As you look to sell internationally, don't forget about the fulfillment side and its boons and costs. Pricing your shipping costs appropriately to maximize sales while minimizing returns, abandoned carts, and your own costs is an important part of the process. In the end, though, you'll have increased revenue and happy customers around the world.