What many people don't understand or realize, is how the billed shipping cost is determined. I get the inquiries all the time: "How is it, you charge me $11 for a UPS shipment, when I go to the UPS store and they only charge me $8 for the same package?"
What they don't understand is that the actual billed cost of the shipment that the UPS register shows is not the actual cost to ship that parcel. Look at it this way: If you have a walk-in store and you buy a product, you are paying for the cost plus the profit, plus whatever cost that was associated with the product comes to. The store buyer purchases those items, generally in smaller quantities to save shelf space, and PAYS shipping to get the items to his store. The store likely purchases the products pre-packaged and all they have to do is put them on the shelf and wait for the customer to purchase the items. Typically, he purchases many of those items at the same time, and receives a quantity discount for them, so his profit is a bit higher. But, his money sits on the shelf so he's usually real keen on inventory costs. Gotta pay taxes for that inventory as if it were cash in the bank.
Now, consider a mail order business where you're buying the same product, sometimes a bit less expensive - and usually without having to pay sales tax. The company you buy the parts from does the same thing; purchasing in quantities to get the better price. However, this same company has to stock shipping boxes, packaging material, packaging tape, labels, shipping tables and carts, and so on. In addition, the company employs a shipping clerk (if the quantity of shipments require it) who gets a paycheck, insurance, vacations, fringe benefits, sick pay, training, and so on (remember, the brick-and-mortar store has no such paid employee). Also, the company has to inventory all the packaging material, provide shelf space for this stuff, provide warehouse space for the shipping department, and heat, cool, illuminate, and pay taxes for each square foot of space needed. It's a no-brainer to calculate the cost to heat and cool and light and insure a couple hundred square feet of warehouse space devoted to empty cardboard boxes and supplies for a typical business. And, if somebody in shipping (or spell-incorrected online ordering) makes an error, misses a digit, doesn't get the street name exactly right, forgets to name STREET or AVENUE, and the package gets returned, it's gotta be re-shipped again - usually at the company's expense. And, businesses have to pay a weekly fee for the luxury of that big brown or white truck to stop by every day and pick up those packages. Pile all this on to the cost to ship a parcel.
Oh, and if the company is small enough where they don't employ a shipping clerk or shipping department, it's usually the owner who does the task - albeit without remuneration for his services. You see where I'm going.
The real shipping costs associated with products include a lot of unseen or poorly understood expenses, and add them all up, you can easily see why the "billed" shipping cost is greater than the advertised cost from the shipping company. And, the mail order business incurs greater expenses in selling products than the brick-and-mortar walk-in store for those reasons. Most, if not all mail order companies use a multiplier that, at the end of the day, returns the exact amount of cost back to the company. Once you run the numbers at the year's end, you will either be in the black, or in the red. If you're in the red, you are not charging enough for shipping; if in the black, you are. Simple economics.
UPS, for example, raises the rates across the board every February of every year. It also charges extra for residential service, sometimes even double the business service to the same town. Air shipments are way over the top, have been for some time. But UPS is reliable, more so than USPS or FEDEX, at least from my experience. So, sometimes you just pay a bit more for what I consider peace-of-mind.
There's my two cents plus.
