Cost Calculation

Question from one of our subscribers:

Hi All,

I have just got an invoice for 20 different items and the quantity varies between each from 100 – 300

The shipping cost is quite high and have been told if I took one of the items off then it would drop quite a lot.

My question is when deciding on a price to sell something how would you incorparate the price of shipping to the cost of the item.

would you simply divide the shipping cost evenly across each item (resulting in the lighter items having to be sold at a higher price),
Apply a rough percentage of the shipping price to each,
Would you work it at a higher lever i.e. call it shipment 1 which has a total cost of “x” and work out the revenue you expect and take the 2 away from each other for the potential profit (not telling you much per item which might cause problems if I had to lower the prices of items)

Or have I missed something?

Thanks guys



This is something you must choose. There are a few methods for deciding “landed cost”, or the aggregate expense to your racks. Percent of weight or percent of delivery are two of the most widely recognized. The principle thing to consider is the thing that will work best for you in the long haul. It’s the kind of thing where the taxman provides for you a decision at the beginning, however you can’t hop starting with one technique then onto the next once you begin bookkeeping.


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