How to Charge for Shipping: Free, Flat or Calculated?
By Saurabh Pandey · Updated · 3 min read
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Shipping is where many small online shops quietly lose money. Undercharge and every order costs you; overcharge and buyers abandon their carts. This guide explains how to charge for shipping, compares the main options, and shows how marketplace fees affect postage.
The three main ways to charge for shipping
| Method | How it works | Best for |
|---|---|---|
| Free shipping | Postage is built into the product price | Light, similar-sized products; competitive marketplaces |
| Flat-rate shipping | One fixed price per order or per item | Shops with products of similar size and weight |
| Calculated shipping | The buyer pays the carrier rate for their address | Heavy, bulky or varied products; international orders |
Many shops combine them: for example, flat rate, with free shipping over a threshold to encourage bigger orders.
Step 1: know your real shipping cost
Before choosing a method, work out what each order actually costs to send:
- Postage, based on the parcel's billable weight. Carriers charge for the greater of actual and dimensional weight, so a light item in a big box can cost much more. Check with the calculator below.
- Packaging: boxes, mailers, tape, tissue paper and inserts.
- Time and trips to the post office, if you don't use collections.
Dimensional Weight Calculator
Open full calculatorFee breakdown
Enter the box dimensions.
Step 2: remember marketplaces charge fees on shipping
On most marketplaces, shipping you charge is part of the order total, and fees apply to it:
- Etsy charges the 6.5% transaction fee and payment processing on shipping.
- eBay charges the final value fee on the total, including postage.
- Mercari charges 10% on shipping the buyer pays.
- Amazon charges the referral fee on shipping you charge as an FBM seller.
Example on Etsy (US)
A $30 item with $5 shipping charged to the buyer:
- Fees on a $35 order: $0.20 listing + 6.5% ($2.28) + 3% + $0.25 ($1.30) = $3.78
- Without the shipping charge, fees on $30 would be $3.30.
So the $5 shipping charge itself costs about $0.48 in fees. If the label costs exactly $5, you lose $0.48 on every order. Charge a little more than the label, or include the fee in your price.
Step 3: choose your method
Free shipping
Raise the product price by your average shipping cost plus the fees on it. Buyers love "free", and Etsy and other marketplaces often favour listings with free shipping in search. The risk is distant or international orders that cost more than your average. Limit free shipping to your home country or set separate international rates.
Flat rate
Set a flat rate that covers your average order, not your cheapest. Add a small amount per additional item for multi-item orders. Review it whenever carrier prices change.
Calculated shipping
Calculated shipping is the most accurate but needs exact weights and box sizes for every product. Use it for heavy, bulky or high-value products where a flat rate would be unfair.
Step 4: use a free-shipping threshold
"Free shipping on orders over $50" can raise your average order value. Set the threshold a little above your current average order so that many buyers add one more item to qualify. Check the margin on orders just above the threshold with the profit margin calculator.
International shipping tips
- Use calculated or region-based rates rather than one worldwide price.
- Include customs paperwork time in your costs.
- Tell buyers that import duties or taxes may be due, except where the marketplace collects them.
- Offer tracked services for higher-value orders to avoid lost-parcel disputes.
The bottom line
Know your true cost per parcel, remember fees apply to shipping, and pick free, flat or calculated shipping based on your products. Read what is dimensional weight to stop paying to ship air.
Fee examples use Etsy US rates checked in October 2026.
Frequently asked questions
Should I offer free shipping?
Free shipping often increases conversions, especially on marketplaces. If you offer it, build the full shipping cost and the fees on it into your product price so your margin stays the same.
How much should I charge for shipping?
At least your real average cost per order: postage at the billable weight, packaging, and the marketplace fees charged on the shipping amount.
Do Etsy and eBay charge fees on shipping?
Yes. Etsy's transaction and processing fees and eBay's final value fee apply to the shipping you charge as well as the item price.
What is a good free shipping threshold?
A common approach is to set it slightly above your current average order value, so buyers add one more item to qualify.