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Shipping and Handling Charges
One of the main advantages of retail sources is that
you are shopping in person and can take the item home with you. When you buy from an
online or catalog vendor, however, the item must be sent to you. Shipping items costs
money, and you usually end up paying for it explicitly through a charge added to the
order. Vendors vary greatly in how they charge for shipping and handling; this can
make a huge difference in the total that you pay for many items, often making one vendor
far more attractive than another.
There are no standards for how companies charge for shipping items. In some cases the
company attempts to charge you exactly what the shipping is costing them; other companies
use shipping charges as a way of incentivizing additional sales or distinguishing
themselves from their competition. Some use it just to make money at your expense. Here
are just a few of the more common pricing models out there:
- Exact Charge: Shipping and handling is charged based on the exact cost that the
carrier charges the company to ship the item. Probably the only really honest
method, it is also one of the least common because it makes billing difficult: they can't
tell you what the order total is until it ships, and many customers don't like this.
- Per-Pound Charge: Shipping is charged based on the weight of the item. This is a
common method, and since most carriers charge on this basis, it is a fair one--assuming
the company is being honest about what items weigh and what the shipping costs per pound.
Sometimes the charge is based on how far away you are from the company, but this is
actually uncommon. These companies are the best choice for smaller, high-ticket items.
- Per-Dollar Charge: Shipping is charged based on how much you order, regardless of
what it is. I've always considered this a very strange model, because the cost of shipping
something has nothing to do with what it costs, except in a very broad way. This method
biases orders towards larger, cheaper items. A company that prices this way is not a good
place to buy smaller, expensive items.
- Per-Dollar Charge With A Cap: Shipping is charged based on the value of the order
but with a maximum total. A company using this model is encouraging large orders, because
above a certain point you get the additional items for no additional shipping charge. I've
even seen companies that charge based on order value up to a certain point, and then after
that the shipping is free!
- Flat Charge: A flat fee is charged for all orders regardless of the weight or
value of the order. Again here, the company is trying to discourage small orders in favor
of large ones.
- Free Shipping: Some companies don't charge explicitly for shipping at all. Of
course, they build the shipping cost into their prices, making them less competitive. But
if their price is close to or the same on something as another company that does charge
shipping, you may have a winner there. Some companies usually charge for shipping but have
short-term "free shipping" deals; see here for more.
Obviously, the way that a company charges for shipping and handling has an important
impact on the optimal "strategy" for shopping at that company. If the company is
charging per-dollar, you want to buy cheaper items there; if by the pound, lighter items.
Overall though, the more you buy from a company, the less the shipping and handling
usually is as a percentage of the total order cost. If the company has a flat charge,
that's especially important, because on small orders you might end up paying twice as much
for the shipping as the item itself.
Some online vendors are honest and fair about how they charge for shipping.
Unfortunately, many companies are dishonest, ranging from exaggerating costs a bit
to what I can only call outright fraud. Here are some of the tricks you should watch out
for in this area:
- General Overcharging: Some of the "flat rate" or "per-dollar"
charges for shipping can make smaller or even medium-sized orders not economical. I have
never understood how a company can try to charge $7.95 to ship a $30 order with a straight
face, while pretending that the weight of the item is irrelevant. Even where they charge
per-pound, often the cost per pound is far in excess of what the company is really paying
(bear in mind that large companies get better pricing from the shipping companies.)
- "Jupiter Syndrome": Any object on the planet Jupiter would weigh many
times what it does on Earth, due to the larger planet's increased gravitational pull. It
seems that some companies that charge for shipping by the pound have warehouses on
Jupiter, if you look at what they seem to think things weigh. ;^) Weights several times
actual are often entered into the system to drive up shipping charges; the company of
course is only charged by the carrier for what the stuff actually weighs. I once ordered
five CompactFlash cards, which with their packaging might have weighed 3 ounces
each; the vendor's system had them listed as "one pound" each. (They claimed
that this was the minimum weight their system could handle; frankly, I don't care--they
should upgrade their system, or let the salesperson override the total.) The company's
system added these up to come to an order total of 5 pounds. If the box weighed one pound
even with the packing materials, I would be surprised. Watch out for this "rounding
issue" on smaller items.
- Explicit "Handling" Charge: Charging customers for "handling"
is a farce that we have all put up with for far too long, as far as I am concerned. If a
company is selling hardware, shouldn't they expect that they will have to
"handle" it? Did they expect the products to box themselves up and ship
themselves to the customers automatically? Don't retail stores have to "handle"
items also? Sorry for the rant, but it's a bit ridiculous and I'm growing tired of it. I
once placed an order from a catalog company that had "free shipping" on all of
their products--then after I had spent 20 minutes on the phone ordering a bunch of items,
they tacked on a $3.95 "handling charge". I haven't touched their catalog since.
- Auctions: Many sellers in auctions rip off their bidders with ludicrous shipping
and "handling" charges. Find out in advance what the cost will be, and refuse to
bid in the auctions of people who try to gouge their bidders. (Some sellers seem to think
overcharging for shipping is OK as long as they say this up front; it isn't. Send these
sellers a message by refusing to bid in their auctions.)
- Outright Highway Robbery: There are companies that literally make a living
on shipping and handling charges. They drop their list prices down to the point where they
are selling at or near cost, often to get top billing in price search engines, then charge
outrageous shipping charges. I once ordered a hard disk from a company that wanted
over $20 to ship it from a state 100 miles away from my home. Some companies have tried to
charge people $90 to ship $900 worth of PC components, weighing less than 20 pounds. Do
not do business with these companies. If someone tries to overcharge you in this way,
tell them to cancel the order, and hang up the phone.
A note on international shipping. If you are ordering from a company other than the one
where you live, be sure to find out exactly what the shipping cost will be. Some companies
won't ship outside their home country; others will, but charge a fortune for the
privilege. You may do better with a local source in some cases.
Tip: Some online companies,
if they have a warehouse physically near you, will let you pick up your order to save on
shipping charges. Unfortunately, most will not, usually because it causes too much hassle
for them and they have no way of dealing directly with the public at the warehouse.
Tip: If you think you might
be getting ripped off on shipping, then contact the carrier you are using directly. Tell
them approximately the weight of the item, where you are, and where the item is shipping
from. If the number they give you is far less than what the company is charging, tell them
to lower the charge or go elsewhere. Do remember that some companies ship from a number of
different warehouses, so the item might be further from your house than you think.
The bottom line of shipping and handling is that you should always ask the person
taking the order what the cost will be, and decide for yourself both if it is reasonable
and if the cost of the items plus the shipping is worth it to you. If not, and
especially if the shipping charges are ridiculously high, cancel the order immediately,
and tell them why you are doing it. Spend your money somewhere else, possibly a local
source if the item is large.
Also see the section on delivery options for additional relevant information.
Next: Sales Tax
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