The Small Business Guide to Shipping Rates: How to Get Good Pricing from Day One
Author
Josue Tello
Date Published
If you are running a small business, you know that shipping is likely your second or third largest expense. When you walk into a carrier store or print a label online, you might assume the price you see is the price everyone pays.
It isn’t.
Getting "good" shipping rates isn’t about luck; it’s about understanding how carriers calculate costs and setting your account up correctly from the start. Here is your foundational guide to stopping the overspend.
1. The Basics: It’s Not Just About Weight
Novice shippers look at the scale. Experienced shippers look at the tape measure.
Carriers like FedEx and UPS use Dimensional (DIM) Weight to determine pricing. This means if you ship a lightweight item (like a pillow) in a large box, you are charged for the size of the box, not the weight of the pillow.
The Lesson: Always use the smallest box possible. Even an inch of extra space can push you into a higher pricing bracket.
2. Understand Your Zones
Shipping costs are calculated based on "Zones," which measure the distance from the origin to the destination.
Zone 2:
Local/Regional (Cheaper)
Zone 8:
Cross-country (Expensive)
If you find that 80% of your customers are on the West Coast, but your warehouse is in New York, you are paying a "Zone 8 premium" on almost every package. Understanding your zone density is the first step to optimizing costs.
3. Immediate Action: Stop Paying Retail
Never pay the "counter rate." Even if you are shipping only 10 packages a week, you qualify for better tiers than the standard consumer.
FedEx:
Look into programs like "FedEx Great Rates" or standard business account creation.
UPS:
Check out "UPS Connect" or similar small business programs.
USPS:
Use third-party postage providers (like Pirate Ship or Shippo) rather than buying postage directly at the Post Office counter.
These programs are free to join and can instantly knock 10% to 20% off your bill.
4. Verify Your Savings
Setting up the account is step one. Verifying that the discount is actually applied is step two. Carriers often have complex billing cycles, and sometimes discounts don't trigger correctly on specific service types.
How PigeonAI Helps:
Once you have your base rates established, you need to monitor them. PigeonAI’s analytics help you visualize your spend per zone and per carrier, ensuring you are actually getting the "good" rate you were promised.