Postage rise – how will I handle that ?

Virtually all my products go through the postal system, specifically Royal Mail at some point in their journey to their owners and like many small businesses who sell on line or even to retailers, postage is a considerable cost to the business.

Anything I say here is from the perspective of someone who pays counter prices. I don’t have a franking machine or a business account. As yet. So I’d love to have comments from those of you that do as to how you see things.

Most of my orders come through on which I do charge postage but once the commission has been taken on top it doesn’t actually cover the cost of postage, oh and the packing materials too, (if you consider the time spent packing each item then forget it)!

When I started my own shop I did have postage in line with the actual weight of each item but of course it is hard to tell whether having postage charges separate to the item price has ever resulted in lost sales.

For the last month or so I have had free postage on my site and I have had more orders. Now whether this is simply the result of more people finding me or the free postage I will never know.

I was chatting to someone who is very successful on Noths about this on Twitter and she doesn’t charge postage on Noths or her own site. Interestingly both she and Noths say that sellers without postal charges are preferred by buyers – that its the biggest reason for basket abandonment. I am so slow to catch on sometimes.. I’ve tried to make the price of the actual item as cheap as I can without having no profit at all and then a small amount of postage.

The way I am thinking now is that it might be better to charge more for the work I do and give free postage across the board. This would make it a lot more simple creating prices for third party websites too. At the moment I add on postage that is more of a contribution, knowing full well that these websites usually have fixed price delivery charges to their customers. It seems daft to me that I am charging – for example, £14rrp + free postage for a fairy star when another site charges £20.95 for my work once postage is added. And they do sell well. Which says a lot. It’s a big job to comb through all my costs again but it should be doable by the end of April.

You can see some of the new postal rates on the Royal Mail site  and lots of waffle. More detailed downloads can be found on the Royal Mail site too. I printed out my own prices chart last night to refer to.

Most of my items are in the 50 – 150g weight – nearly all large letter but occasionally I have packets – probably 20 % of the time – particularly if someone orders more than one thing at a time. This is where it seems to get silly. The price of a 101g parcel is the same to post as a 750g one. Clearly if your parcels are 750g usually this is going to be a bit better for you – but not if they are at the lower end.

There are various things you could do:

  • build costs firmly into your prices + offer free postage
  • offer free postage for second class speed/postage and more expensive optional 1st class – effectively fast tracking someones order – which may or may not be practical depending on whether you hand make items to order
  • have a fixed price like many successful websites do of £4.95 per order. This is less attractive if you have low priced items however  – certainly doesn’t appeal if you sell greeting cards!
  • have free postage except for heavy or bulky items that need very careful packing
  • increase your postage per item according to the price rise
  • absorb the cost and do nothing. Not something many of us could do I would imagine. It may happen with apathy of course!
  • find an alternative postal service – if your business is large enough to justify that maybe its worth investigating?

I know which appeals to me. What about you?  What appeals to you? What is a no-no for your business? Have I missed something obvious?