For some online sellers, the USPS shipping rate changes have major repercussions on shipping margins. They can also have effects on how you have to package and prepare your shipments, particularly large, light items. If you want a better indication of what the effects of 2021 shipping rate changes could be on your bottom line, we’re going to dive into some examples here to help you know what to expect.
(Note: this article has been updated to reflect the 2021 USPS shipping rate changes)
Let’s start with USPS First Class shipping.
Effects of Shipping Rate Changes: First Class
Before we dive into this breakdown, you can view our full breakdown of the 2021 USPS shipping rate changes here.
Here, let’s take a look at a possible scenario. In the table below, we’ve taken a cross-section of ten orders shipping out in a day, all going First Class Package Service, to illustrate the cost difference from 2020 rates to the new 2021 shipping rates.
|Weight (oz)||Zone||2020 Postage Cost||2021 Postage Cost||Difference|
Extrapolating that out per week, month, and year, you can see the hit to your bottom line adds up. Shipping just 10 orders per day, the end-of-year cost increase is $810.30. Particularly for a smaller merchant, this is something you’ll certainly need to account for.
That being said, First Class Package Service is still the most cost-effective shipping method for items under 1 lb.
Effects Shipping Rate Changes: Priority Mail
This is where things will get a lot more complicated, and a place where having shipping software will assist greatly. Across all Zones, Priority Mail incorporates Dimensional Weight, also called DIM weight, so you’ll need to perform different calculations. For a full breakdown of dimensional weight, you can read our article here.
The way to calculate Dimensional Weight is to take the length, width, and height in inches of your package, and divide that by 1,728 (the number of inches in a cubic foot). If the number is larger than 1 cubic foot, then you need to use Dimensional Weight with the following equation:
(L x W x H)/166 = Dimensional Weight (Check out our DIM Weight Calculator to have this calculated for you – currently FedEx, UPS, and USPS all apply dimensional weight to packages, with UPS and FedEx applying to all packages)
The 166 divisor is used by USPS. UPS and FedEx use a divisor of 139 to calculate dimensional weight. If the Dimensional Weight is higher than the physical weight, your shipping costs are based on the new Dimensional Weight. In some cases, this can cost a good deal more than the original weight.
16 x 12 x 10 package, weight 2 lbs., shipping to Zone 2
Is it larger than one cubic foot: (16 x 12 x 10)/1728 = Yes (1.11 cubic feet)
Dimensional weight: (16 x 12 x 10)/166 = 11.57 lbs. (round up to 12 lbs.)
The 2020 Priority Mail shipping rate for a 2 lb package: $7.64
The 2021 Priority Mail shipping rate for a 2 lb package: $7.79
The 2021 rate with DIM Weight incorporated: $12.90
As you can see, excess package space can literally cost you nearly $5 per shipment if you’re not being smart about how you package your products. That being said, if you have large but light products that can’t be squished into a smaller than 12 x 12 x 12 box, you’ll need to expect higher shipping costs when sending products through Priority Mail.
These calculations can get a bit hairy. Shipping software can help you make sense of it all and ship using the smartest (and most cost-effective) means possible. Set up your ShippingEasy account now and get 30 days free! We also have an award-winning team of shipping experts who can help you along the way.
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