Shipping charges: The hidden expense

Written on:December 26, 2010

In today’s competitive environment where every dollar counts, finding ways to save money without compromising quality and service are an important part of staying competitive.

When your company buys anything, to resell, make sure you know the true cost of getting that product to your dock. Any mistake you make will come directly out of your profit. It is no secret that we live in a global economy. Products and services move freely around the world. From printer cartridges, to accounting services, automobile parts and more, whatever it is there is more access to a more diverse group of vendors. This competition is good for the consumer because it will lower prices. However, there is a recent trend for companies to pad their profits by charging shipping charges above their cost and also adding a “handling fee” on every order.

For example:
Lets say you had to purchase $1000 worth of merchandise to resell to a customer. Normal shipping charges would be $14, but you get charged $24. You also get charged a $10 handling fee. You have paid $20 more for the product than you were. That is 2%! In today’s competitive market, 2% can be the difference between getting the sale and not getting the sale. Even if you would get the sale anyway, that 2% is yours. How would your bottom line be different if you received 2% off of every invoice you received?

One way to combat this is to work with vendors that include shipping charges in their quote and do not charge a handling fee. As your vendors about this and be persistent. Remember, they may have a policy that says they must charge these fees, but that does not mean that they can’t or won’t make an exception for you. You will no doubt hear “It’s only a few dollars, what’s the big deal?”
The answer is that if it’s no big deal; let them give the few dollars to you.
Remember, it’s your money