Every year the shipping rates increase, shipping is one of those unglamorous but crucial things that every e-commerce company has to deal with. This guide will help you reduce shipping costs. Here are six variables that can affect the cost of shipping for your online store.

1. Package dimensions

All major carriers use a pricing technique called dimensional weight (also called DIM weight) to calculate shipping rates. Dimensional Weight takes into account the size of a package to determine the shipping cost.

DIM weight is calculated by multiplying the length, width, and height of the package or box size, then dividing by a standard DIM divisor. Shipping carriers like USPS, FedEx, and UPS calculate shipping charges based on whichever is greater: the actual weight of the package or its DIM weight. Whichever is higher becomes the billable weight for which your business will be charged.

2. Package weight

The packaged weight is how heavy the item is – no DIM divisor or calculation is necessary. As mentioned above, if this number is higher than the DIM weight, it’ll be used to calculate shipping costs. The heavier and larger the package, the more expensive it will be to ship.

3. Shipping destination

Carriers use shipping zones to calculate shipping rates. Shipping zones measure the distance between a package’s point of origin and its destination. This means that two different points of origin shipping to the same destination may be shipping to completely different zones. As a rule of thumb, the higher the shipping zone, the more expensive a package will be to ship.

4. Value of contents shipped

If you’re shipping very high-value products, you may want to have your shipments insured. Shipping insurance offers reimbursement to senders whose parcels are lost, stolen, and/or damaged in transit. While useful, this service can add significantly to your shipping cost.

5. Delivery times

Thanks to Amazon Prime, customers expect fast shipping everywhere they shop online. However, if you’re shipping from only one location, fast, premium shipping gets more expensive as zones get higher. For example, 2-day shipping to a customer in Zone 1 can be done through ground shipping; 2-day shipping to Zone 8 will require more expensive expedited air shipping.

6. Unexpected problems

No matter how airtight your shipping strategy is, unexpected issues may come up from time to time. These can range from delays in transit to lost or damaged items, to split shipments. While you can never predict exactly what will happen, make sure to leave some wiggle room in your shipping budget in case of emergency