Selling strategy as it regards shipping costs ("Free" or charge separately?)

[5-solas]

Greetings - as a relatively new seller, I'm hoping to gain some insight from those who are more experienced and have been doing this a long time.  My primary question is this:  what is everyone's recommended strategy as it relates to shipping costs - i.e. whether to charge separately for shipping, or whether to factor that into the price and advertise it as "Free shipping"?  Do you find that one works better than another or do you vary your listings depending on the particular item? 

As I'd imagine most if not all of us are also buyers as well, I always sort my own purchase searches using the "Price + shipping: lowest first" feature.  I will then usually end up purchasing those who come up with the lowest total cost - regardless of whether the item was advertised as "Free shipping" or not.  But I know some are attracted to the lowest overall price, and yet on the other hand some are attracted merely because the item was shown as having "Free shipping" - the prevalence of Amazon Prime shopping has conditioned many in that regard.

Another thing I've recently discovered is that many states don't charge sales tax for shipping costs, so listings that have shipping charges separated out would allow those buyers to pay less sales tax for their items.  That's definitely good to know, although because the bulk of my items are relatively low in cost (less than $40) I'm not sure that's as much of a factor in my case (though I could be wrong).
 
I'd love to hear from those on either side of the aisle as to which strategy you employ, as well as from those who use a combination of both.  Thanks in advance and hope y'all have a great weekend of sales!

[inhawaii]

There is no such thing as free shipping. Someone has to pay for it.

A) Charge the shipping separately.

B) Call if "free shipping" but add the shipping charges to the price of the item.

I choose A.

[evry1nositswindy]

I have done both and found that free shipping works best for me.  Most of my items are books and media mail shipping doesn't vary by zone.  I also look like a hero when I offer "free" priority on  my other items when other sellers are charging for it.  My reason?  I find that many buyers don't want to add up the cost of the item plus shipping.  They want to see one total and be done.  I sort by price + shipping too, but others do not.  

Try it both ways and see what works for you.

[southern*sweet*tea]

I tried "free" shipping for a while. I got rid of it and went to item price plus shipping and my sales increased.  

Shipping costs money.  My buyers know that.  I charge for shipping.  I don't hide it into the item price and call it free. That's a lie and a marketing gimmick.

I get a fair amount of multiple purchases, and free shipping just means those buyers are being overcharged.

[nobody*s_perfect]

For me, it depends on the item and the type of shipping I plan to use. As noted above, non-zoned prices (e.g., Media Mail, Priority flat rate boxes and envelopes) are easy because you can add the price to the item and offer "Free" shipping. I'll use it for First Class shipping because the cost for Zone 8 is less than 70 cents and it's easy to pick a midpoint.  But even that doesn't work if you sell the types of items that buyers might purchase in multiples.

For items over 2 pounds, which are going via Priority, I use calculated shipping because the price of postage can vary so much. For 3 pounds, the price range is $8.00 - $16.45.  If I add $16.45 to my price, I'll lose closer buyers but if I add less, then I lose money when I ship to buyers on the opposite coast.

[go-bad-chicken]

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@5-solas wrote:

Another thing I've recently discovered is that many states don't charge sales tax for shipping costs, so listings that have shipping charges separated out would allow those buyers to pay less sales tax for their items.  That's definitely good to know, although because the bulk of my items are relatively low in cost (less than $40) I'm not sure that's as much of a factor in my case (though I could be wrong).
 
I'd love to hear from those on either side of the aisle as to which strategy you employ, as well as from those who use a combination of both.  Thanks in advance and hope y'all have a great weekend of sales!

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I'll make the case for why its bad for sellers to offer "Free Shipping" and instead should be charging their buyers for shipping.

Sellers who offer "Free Shipping" are costing 41% of their buyers more money and in turn paying eBay more in FVFs due to the fact that they offer "Free Shipping".

Here is a question and an example:

Which is cheaper for the buyer : A $500 widget with $25 shipping or a $525 widget with Free Shipping?

Here in the U.S. 41% of the population lives in 18 of the states where the shipping portion of an online transaction is sales tax exempt.

For that 41% of those buyers the $525 with Free Shipping will cost them more than the exact same listing that charges $500 for the item and $25 for shipping separately. 

As an example a buyer from California (9% sales tax) will pay $2.25 more in sales tax for the Free Shipping listing.

And here's the extra added kicker. The seller is going to pay eBay a FVF on that extra sales tax that they collected (about $0.26). All in the name of offering Free Shipping.

And I can see where a seller might think that "My items have a very low shipping cost, so it won't matter that much" I would respectfully disagree. I happen to own homes in two of the states on the list of 18 states below, that do not charge sales tax on shipping. Every time I see "Free Shipping" I know that Im getting the raw end of the stick, and that the sellers who offer "Free Shipping" are costing me more money. For me if I can find the same item from another seller who's price is close or identical but charges for shipping, I am going to make my purchase from that seller.

When you are a resident from one of the 18 states and 41% of the population is, you pay attention to these types of details.

Does anyone anywhere want to voluntarily pay more in taxes, of any kind?

Raise your hand if you do.

That is what "Free Shipping" essentially does for 41% of the U.S. population. IT RAISES TAXES! Who wants to be that seller?

So sellers really should consider doing their buyers as well as them selves a favor and start charging for shipping. They will thank you for it later.😀

For Your Information:

The List Of 18 States Where Shipping Is Exempt From Sales Tax:

These 18 States Represent 41.3% Of The Overall Buying Population:

1 - Alabama - 4,903,185 – ** Ranked #24 (1.48%)
2 - Arizona - 7,278,717 – ** Ranked #14 (2.19%)
3 - California - 39,512,223 – ** Ranked #01 (11.9%)
4 - Colorado - 5,758,736 – ** Ranked #21 (1.74%)
5 - *Florida - 21,477,737 – ** Ranked #04 (6.47%)
6 - Idaho - 1,787,065 – ** Ranked #39 (0.54%)
7 - Indiana - 6,732,219 – ** Ranked #17 (2.03%)
8 - Iowa - 3,155,070 – ** Ranked #31 (0.95%)
9 - Louisiana - 4,648,794 – ** Ranked #25 (1.40%)
10 - Maine - 1,344,212 – ** Ranked #42 (0.41%)
11 - *Maryland - 6,045,680 – ** Ranked #19 (1.82%)
12 - Massachusetts - 6,949,503 – ** Ranked #15 (2.09%)
13 - Missouri – 6,137,428 – ** Ranked #18 (1.85%)
14 - *Nevada - 3,080,156 – ** Ranked #32 (0.93%)
15 - Oklahoma - 3,956,971 – ** Ranked #28 (1.19%)
16 - Rhode Island - 1,059,361 – ** Ranked #28 (1.19%)
17 - Utah - 3,205,958 – ** Ranked #30 (0.97%)
18 - *Virginia - 8,535,519 – ** Ranked #12 (2.57%)

Total population for all 18 states that do not charge sales tax on shipping:

135,568,534 (Buyers) out of 328,239,523 (Total U.S. Population) =

= 41.3% of Buyers Who Are Being OVERCHARGED By "Free Shipping"

* States were shipping fees are not taxable if handling charges are listed separately, or if there is no handling fee at all (*MOST eBay Sellers).

** Ranking Out Of The 50 States Followed By (XX.X%) Percentage Total Of The U.S. Population

[5-solas]

@go-bad-chickenthanks for that detailed rundown!  I think it really helps to explain the implications of the extra sales tax incurred for the buyer when the shipping amount is rolled into the listing price.  But in this era of Amazon Prime with free 2-day shipping, I'm just not sure how savvy most buyers are to this type of thing.  Certainly for high ticket items one would hope they'd pay attention to that, but I'm guessing for things under $50 or so, it probably doesn't weigh too heavily on most people's minds.  But I could be wrong.  

As it stands, I'm experimenting with a few of my items as "Free shipping", but for the vast majority of them I just try to start out with a competitive asking price, and also a fair shipping price that is additional to that.

[dhbookds]

Best thing to do is to research on specific items and experiment.........  Free shipping is definitely an attraction for some buyers.......I'm one......if it is competitive in pricing.   But if you sell heavy stuff, it's hard to implement due to competitive pricing......

One thing you might consider trying also.......is to charge only a "small" amount for shipping and roll the rest into the price.......  That can work, again, if the sell price is somewhat competitive.  As many "free shipping"  buyers as there are, there also those who are appalled by real shipping prices and think the seller is ripping them off.....

[m_pthisandthat]

I charge shipping never free shipping. I sell collectibles alot are purchased a significant distance from my location. I have had very few buyers who have gotten hung up on the shipping. To be sure I do think a big part of this is the fact that the item is a collectible ( glass in many cases) and my competiton is limited.  

[ra_201044]

Also, if the OP tries to/does sell multiples of the same item, or has a buyer purchase multiple items a lot of the time, free shipping would NOT be the way to go. Who wants to pay shipping on every 'free shipping' item when they can buy 5 or 10 from someone who calculates shipping and only charges shipping(for basically one or two).

[luckythewinner]

Some quick thoughts, apologies if these repeat others:

1) If shipping cost can vary widely by location, free shipping requires you to "average" the cost when you roll it into the price. This may not be a good model, because you may discourage buyers close to you (the ones with below average shipping costs, because yours are high) and you may attract buyers from far away (i.e. with above average shipping costs.) In other words, you may attract the least profitable buyers.

2) Shipping costs are exempt from sales tax in some places. You may be costing your buyers money.

3) When I buy on eBay, I shop by sorting Price _+ Shipping - Lowest First. So free shipping is not a big driver for me.

4) While some will say that "free shipping is not really free", unfortunately some buyers are not very bright. That is why free shipping is so wildly popular in e-commerce even though it is really just a gimmick.

[5-solas]

@ra_201044  and @luckythewinner  thanks for those inputs and it makes me think of something else I meant to relay at the outset.  One of the potential advantages of offering "Free shipping" (assuming you've obviously priced your items competitively) is that people can feel like they are able to more easily purchase many of your items (whether multiples of the same or similar item or not) without having to figure out how much added shipping costs they will incur.  Again, I don't know that many of them are going to give much thought to the fact that those shipping costs have already been rolled into the item.  But I could be wrong.  Thankfully I also recently started (and know I need to get better at) setting up my listings so that people purchasing more than 1 item don't have to pay double the shipping costs.  I'd be interested in hearing everyone's advice and lessons learned regarding that as well.  It wasn't as easy or as intuitive to do as I had hoped - and seems like I can't even do it using my mobile device and has to be done at the desktop/laptop instead.

I've also not experimented much with advertising as "Buyer pays calculated shipping".  Does that work well for a lot of folks and is that what you guys are alluding to above? 

For the vast majority of my listings that have shipping fees listed separately, I generally use the "Buyer pays flat shipping" and charge what I feel is a reasonable amount based on the size and weight of the item.  In some cases I can make a little extra, and in some cases I lose a bit - but when all's said and done it generally comes out as a wash so I think I've priced it very reasonably.  I've seen some sellers with crazy high shipping fees and one would think that'd be a complete turn-off for any potential buyers.

[johnrj1226]

I tried  "free shipping" and really didn't see  up tick in sales.

One advantage of offering a separate shipping & handling charge is when a buyer wants to  return an item for a remorse reason - like it was the wrong size or it does fit, change their mind, the seller does not have to refund the S & H portion for the return and has the option to or not to return the original amount the buyer payed for S & H.  This is providing you state you have a return policy and state the buyer pays for return vs having a "no returns" policy. 

With "free shipping" the sell has  refund the whole amount the buyer paid.

Try 'free" shipping on a few items where the shipping cost is low - like a light weight item and less than 16 oz that can ship via USPS First Class package and see how it works for you.

[nobody*s_perfect]

"For the vast majority of my listings that have shipping fees listed separately, I generally use the "Buyer pays flat shipping" and charge what I feel is a reasonable amount based on the size and weight of the item."

If you are going to charge a flat price for shipping, then IMHO you might as well just add that to your asking price and offer free shipping.

[a_c_green]

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@5-solas wrote:

I'd love to hear from those on either side of the aisle as to which strategy you employ, as well as from those who use a combination of both.

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For domestic (U.S.) shipping, I offer Free Shipping on all my items having a shipping weight of less than one pound. I don't mind eating the postage on lightweight items and it makes for a cleaner listing. Those over a pound go for Calculated Shipping rates via Priority Mail (or its variations as appropriate: Regional Rate, Flat Rate, etc.) for which the buyer pays. Free 30-day returns as well.

For international shipping, buyer pays. I offer First Class International for most items, with Priority Mail International as a buyer-pays upgrade. For higher-value items, it's PMI only.

From a bidder/buyer's point of view, I like Free Shipping items because I don't have to keep remembering this mental asterisk about how the price I'm looking at (or bidding on) is actually [this much] higher because I'll have to pay Shipping on top of whatever I'm paying for the item itself. That's especially annoying when the seller has some ridiculous Shipping cost, such as Flat Rate Priority shipping on a 5-ounce item.