How Much Are Shipping Costs for a Small Business in Canada?
Posted on: December 6, 2022
When you’re mailing a package for business reasons, there’s a lot that goes into your final shipping costs—and shipping costs for small businesses can climb quickly. Weight, size, and the destination of your package all contribute to increased shipping rates.
Although it may be difficult to forecast how many products you’ll need to ship, you can estimate how much shipping will cost over a select period and find out how shipping actually works. Consider the average amount of product you regularly ship out and consider it alongside factors that may contribute to increased shipping costs.
This article will explore what causes the price of shipping in Canada and offer small businesses advice on how they can save on shipping.
What Causes the High Cost of Shipping in Canada?
Canada has a reputation for expensive shipping. Some international businesses are cautious about shipping to Canada due to the price. However, the cost of shipping in Canada is what it is because of:
Population density: Compared to most other countries, Canada has a relatively low population that lives far apart from each other. When many customers live near each other, shipping companies can deliver lower-cost batch shipments.
Rural service: Canada has a higher rural population than many other countries. Furthermore, many rural Canadian communities are located in very remote areas. To keep post offices open in these communities and postage affordable for the people who live there, the price of shipping in Canada needed a slight increase.
How Much Does Shipping Cost for a Small Business in Canada?
The average cost of shipping for small business owners varies depending on your products and your delivery locations. For example, shipping to Ontario from British Columbia is double the cost of shipping to Ontario from Quebec, simply due to sheer distance.
Heavier packages with a larger surface area will also cost more to ship than smaller and lighter ones. For instance, shipping a T-shirt to a customer would be much cheaper than shipping a computer monitor to that same customer.
Whether or not you need domestic or international shipping will also affect your price. Different countries have different duty fees so both distance and customs will change your final shipping cost.
As a rough example, let’s compare rates from FedEx’s shipping calculator to demonstrate the price differences between package sizes and delivery distances.
In this example, local refers to shipping within the same city, and domestic is based on the distance between Calgary and London, Ontario. These rates include FedEx Canada’s base rate, fuel charge, and GST. Small business discount rates were not applied.
How much does Shipping Cost for Small Business Owners (Example)
**This is just one example. Costs will vary.
Letter (8.5’’ x 11’’ & 50g)
Small Parcel (17” x 14” x 6” & 2kg)
Medium Parcel (24” x 17” x 17” & 10kg)
Large Parcel (26” x 19” x 19” & 20kg)
In comparison, however, let’s take a look at how you can save money with Ship Expert, based on expedited shipping in Canada (with Toronto to Winnipeg for domestic shipping):
If your package weighs less than 70 lbs, it may qualify for flat rate shipping. This shipping option is popular among business owners for its convenience. As long as your packages are within the carrier’s weight restrictions, all packages cost the same amount to ship.
You can purchase flat rate boxes from your carrier. These boxes typically come in small, medium, and large sizes and prices will vary between carriers.
Instead of seeking the average shipping cost for a small business in Canada, estimate the average shipping cost for your business. On average, how big are your products and who do you deliver them to? Will you be using flat rate shipping? The answers to these questions can help you predict how much shipping may cost your business.
How to Figure out Shipping Costs for Small Business Owners
Before you try to figure out shipping costs and create an equation based on your products’ average size and travel distance, consider other factors that will affect your shipping expenses. Some of these factors include:
Shipping materials, such as boxes, wrapping paper, and packing peanuts.
Insurance, which is often an additional charge, however, this can vary based on package size.
“Free shipping” offers and promotions, because if you offer free shipping for your customers, shipping will cost more for you.
Most major carriers have a shipping calculator on their website. Try using it to estimate the average cost of shipping each product before you send anything out. Then, add and subtract possible additional costs and discounts to find your rough estimate.
A real-time rate is when your carrier automatically adjusts the shipping rate whenever there is a change. For example, if a customer changed their desired delivery location.
Keeping an eye on any rate changes can help ensure that you are not overcharging yourself or your customer for shipping.
“Shrink” Your Parcels with Strategic Packing
Item size has a huge effect on shipping cost. Small business owners can cut back on size and weight by using lightweight packing materials such as corrugated containers and foam inserts. Resist the urge to deliver a small item in a large box to make it look impressive.
If you have multiple medium-heavy items to deliver, spread them out between boxes to save on weight charges. Don’t pack multiple items into one box unless all the items are light.
Offer Local Pick-Up Options
If your customer lives within walking distance, it may not even be worth paying for shipping services. Let local customers choose pick-up instead of delivery to save both your and their money.
Learn more about the benefits of working with Ship Expert from these blogs:
Of course, if you want to extend your reach beyond your city, you shouldn’t go with pick-up only. However, you might be surprised by how many customers are willing to choose this option if they can walk or drive to your location.
Try the Multi-Carrier Shipping Strategy
Multi-carrier shipping means that you are not reliant on one courier for every order. This strategy suggests that you compare carriers for every shipment so you can get the best deal each time.
Asking multiple couriers “how much does shipping cost small business owners” takes a lot of manual effort. Luckily, you can save time by using our online tools to compare the rates of each potential shipping solution.
Include Return Shipping Labels in your Original Parcel
Yes, you want to guarantee that every customer is happy with their purchase. However, sometimes, a customer may want to return their package. Returns cost money and customers are less likely to purchase from you again if the return process was challenging.
Include a return label in your delivery to make the process easy for customers who want it, which builds trust and loyalty. Adding this price to your initial shipping cost gives you a better estimate of your cost actuals.
Go with a Third Party for Insurance
You may or may not want to insure all of your shipments. However, for high-value items, it is advisable. Most shipping companies have their own insurance rates, but you don’t necessarily need to use them.
Shop around for your shipping insurance. You may find a third-party insurer that offers a more affordable insurance rate than your chosen delivery service. Additionally, a third-party insurer may have special discounts that your courier may not have.
Use Prepaid Shipping if Possible
Prepaid shipping means that your business purchases a select number of labels upfront before making any deliveries. Many services offer a discount to customers who buy their labels in bulk.
Prepaying can reduce the base shipping cost for small business owners substantially. Furthermore, prepaid labels also greatly reduce time and labour costs because all of your labels are ready to go.
Start Saving on Shipping with Ship Expert
Increase your business’s profit margins by spending less on shipping. When you follow our seven shipping tips and contact us to help you find the best shipping options, you’ll cut your shipping expenses down to size.
Greg Woo is a seasoned expert in the logistics and distribution industry, with a career spanning over two decades. He has a comprehensive understanding of shipping and distribution needs, and has extensive experience integrating with e-commerce stores as well as customer specific WMS (warehouse management systems) and ERP’s (enterprise resource planning software). His tenure in the industry and established courier and LTL partnerships have allowed clients to benefit from reduced shipping expenses, as well as improved operations through software and specialized integrations.
Greg is currently the Director at Ship Expert Inc., a role he has held since February 2015. Prior to his role at Ship Expert, Greg held significant positions at Juxto, a telecommunications and managed internet service provider.
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