Shipping costs can quickly chip away at small business profits. The good news? With smart planning, you can compete with ecommerce giants and still offer affordable—or even free—shipping.

Here are 11 practical tips to help you cut shipping expenses while keeping customers happy and protecting your profit margins.

How to Reduce Shipping Costs for Your Small Business

Looking to cut shipping expenses without cutting corners? These simple, effective strategies will help your small business save money, stay competitive, and deliver a better customer experience.

1. Use Shopify Shipping to Lower Carrier Costs

One of the easiest ways to cut shipping expenses is by using Shopify Shipping. It gives small businesses access to pre-negotiated discounts of up to 88% with leading carriers like USPS, UPS, DHL, and Canada Post—no extra fees required.

These savings are built into every Shopify plan. From your dashboard, you can choose whether to offer customers free, flat-rate, or calculated shipping at checkout. You can even buy and print labels directly through Shopify, complete with auto-generated customs forms for international orders.

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2. Use Flat Rate Shipping Whenever Possible

Flat rate shipping is a simple, predictable way to keep delivery costs under control. Instead of pricing every order individually, shipping costs are grouped by size, weight, or destination. That means you and your customers always know what to expect—helping reduce abandoned carts at checkout.

Carriers like USPS and UPS offer flat rate boxes at pre-set prices, which is especially cost-effective if you regularly ship items of similar size. You’ll be able to budget more accurately while giving customers a transparent, no-surprises experience.

With Shopify, you can easily set up flat rate shipping rules for specific zones, order values, or weight ranges. For instance, you might charge a $5 flat rate for standard domestic deliveries, or reward larger purchases with a $3 flat rate on orders over $50.

💡 Pro tip: If you ship consistently each month, negotiate bulk rates with carriers. Keeping detailed records of your shipping volume and spend can strengthen your case for a better deal.

3. Calculate Shipping Fees Accurately

One of the most effective ways to reduce shipping costs is by calculating them correctly from the start. Hidden expenses can quickly eat into profits, so make sure you’re tracking every detail, including:

Packaging materials – boxes, bubble wrap, tape, stickers, and anything else required to secure your items.
Labor costs – the time and effort it takes to prepare and ship each order.
Courier fees – charges for pickup, delivery, and any additional services.
International costs – import duties, export fees, and tariffs. Shopify’s Tariff Guide makes it easy to find the right HS codes and tariff rates when shipping to the U.S.

Whether you pass these costs on to customers, build them into product prices, or cover them yourself, having an accurate calculation helps you avoid profit leaks. A clear picture of your expenses also makes it easier to decide if you can offer competitive perks like free or flat-rate shipping.

4. Choose the Right-Sized Packaging

You can reduce shipping costs by making smarter choices about how you package each order. Here are a few key factors to consider:

Reduce Package Size

Don’t pay to ship empty space. Always aim for the smallest package dimensions possible. Lightweight options like poly mailers or padded envelopes provide plenty of protection while taking up less room than traditional cardboard boxes. By cutting down on unnecessary bulk and weight, you’ll save on shipping costs and maximize long-term efficiency.

Look for Free Packaging

Many carriers provide free packaging supplies, which can help you cut shipping costs without sacrificing quality. You can also reuse boxes and fillers when appropriate—just be sure they’re sturdy and professional. Beyond the savings, reusing packaging highlights your brand’s commitment to sustainability, something today’s customers increasingly value.

Analyze Order History

Take a close look at your order history to spot trends in package sizes and quantities. By knowing what you ship most often, you can choose packaging that consistently fits your standard orders. This not only streamlines your packing process but also cuts down on waste and helps you save on shipping costs over time.

Create Custom Packaging

For products with unique shapes or special requirements, custom packaging can be a smart investment. While the upfront cost may be higher, it often pays for itself by optimizing shipment sizes and reducing the risk of lost or damaged items. The result: lower long-term shipping expenses and a better customer experience.

5. Reduce the Weight of Packages

When it comes to shipping costs, weight can matter just as much—or even more—than size. Heavier packages quickly drive up expenses, especially if you’re sending bulk or oversized items.

To keep costs down, focus on making your shipments as lightweight as possible. Here are a few ways to do it:

Pack Products in Corrugated Boxes

Corrugated boxes are a smart choice for ecommerce packaging because they’re both strong and lightweight. The air-filled grooves between layers add durability without adding extra weight, helping protect your products while keeping shipping costs lower than standard cardboard.

Pack Products in Poly Mailers

For lightweight, non-fragile items like clothing, poly mailers are an excellent alternative to boxes. They’re slim, durable, and far lighter, which helps reduce both packaging and shipping costs. Plus, their compact size means you can fit more shipments in less space, saving even more in the long run.

Use Lightweight Packing Material

When filling empty space inside a package, choose lightweight options like air pillows, packing paper, bubble wrap, foam inserts, or Versa Pak wadding rolls. These materials keep products secure without adding unnecessary weight, helping you protect items while keeping shipping costs in check.

Split Orders into Multiple Shipments

For particularly heavy or bulky orders, splitting items into multiple packages can sometimes lower overall shipping costs. By distributing weight more evenly, you may avoid expensive surcharges tied to oversized or overweight parcels. Just be sure to compare the total cost of separate shipments against sending everything together to ensure it’s truly cost-effective.

Use a Postage Scale

A small investment in a postage scale can lead to big savings. By accurately weighing each package, you’ll avoid overpaying for estimated weights and ensure precise shipping cost calculations every time.

6. Create a Clear Shipping Policy

Customers want to know what to expect when they place an order, and a well-crafted shipping policy gives them that peace of mind. Your policy should outline shipping costs, delivery timelines, return options, and the process for reporting issues.

While a shipping policy won’t directly reduce costs, it can save money in the long run. Clear communication helps set expectations, streamlines order processing, and reduces avoidable expenses from returns or disputes.

Need a place to start? Shopify offers a free shipping policy template you can customize to fit your store’s needs.

7. Stay Updated on Shipping Rate Changes

Shipping carriers regularly adjust their rates, and even small increases can impact your bottom line. Staying informed about these changes allows you to update your pricing strategy and avoid unpleasant surprises.

Most carriers review and adjust their rates annually—often in January—based on factors like fuel costs and labor. However, changes can also happen throughout the year. To stay ahead, check rate announcements from major carriers such as:

USPS – New rate announcements
UPS – Shipping costs and rate updates
FedEx – Shipping rate changes

You can also subscribe to carrier email alerts or follow industry news sources to keep up with pricing updates. Being proactive helps you adjust your shipping strategy before new rates go into effect.

8. Look for Discounted Shipping Supplies

Cutting shipping costs isn’t just about rates—it also means saving on supplies. Search online marketplaces and wholesalers like Amazon, eBay, or Alibaba to compare prices and quality, or check with industry associations that negotiate special deals for members.

Local suppliers may also offer bulk discounts or have surplus materials at reduced prices. In some cases, major carriers provide packaging at lower costs as well. Buying in bulk can be a smart move: it locks in savings, keeps your supply stocked, and ensures you’re ready to fulfill orders without delays.

9. Use Third-Party Shipping Insurance

Protecting your packages is essential, but carrier-provided insurance can be expensive and often limited in coverage. Third-party insurance providers typically offer more competitive rates and flexible policies tailored to your needs.

By choosing the right provider, you can match coverage to the actual value of your goods while keeping premiums low. Always compare options to ensure you’re getting the best protection at the best price.

10. Offer Local Delivery or Pickup

One of the most effective ways to cut shipping costs is to avoid carriers altogether when you can. If most of your orders come from nearby customers, consider handling deliveries yourself or partnering with local businesses as pickup points.

Offering local delivery or pickup has extra benefits, too:

Build stronger community ties by making it easier for locals to shop with you.
Enhance the customer experience by removing shipping delays and unpredictable costs.
Boost sales by offering a convenient, low-cost alternative to traditional shipping.

Sometimes the simplest option—going local—can be the most cost-effective.

11. Analyze Where Your Orders Are Shipped

Reviewing your shipping data can uncover valuable cost-saving opportunities. Identify the cities and regions where most of your orders go, then position your inventory closer to those areas to cut down on distance—and costs.

For example, if 40% of your orders are headed to the Northeast, partnering with a fulfillment center or warehouse in Pennsylvania could significantly reduce expenses. Shorter shipping distances not only lower costs but also speed up delivery, creating a better experience for your customers.

How to Calculate Shipping Costs

As a store owner, calculating shipping costs isn’t just about knowing what you owe the carrier—it’s also about deciding what to charge your customers. A thoughtful approach ensures you cover expenses while keeping your pricing attractive.

Start by weighing and measuring your most common orders. A standardized packing process helps keep shipping costs predictable and easier to budget.

Next, learn how shipping zones affect pricing. Carriers calculate costs based on distance—the farther the zone, the higher the rate. Reviewing carrier zone maps will give you a clearer picture of how geography impacts your expenses.

Then, decide which shipping methods to offer. Ground shipping is usually more affordable but slower, while express options deliver faster at a higher cost. Your choice depends on your budget and your customers’ expectations.

Finally, determine your shipping strategy:

Free shipping can boost conversions but may require adjusting product prices to offset costs.
Flat-rate shipping provides predictability for you and your customers.
Charging actual shipping costs ensures you never undercharge, but may lead to more abandoned carts.

Balancing these factors helps you create a shipping plan that works for both your business and your customers.

USPS Shipping Costs

For many small businesses, the United States Postal Service (USPS) is one of the most affordable ways to ship packages across the U.S.—particularly for ground shipping.

Here’s an example of how much it costs to send a one-pound package from New York to Chicago using different USPS services:

Service	Estimated Delivery Time	Rate
Ground Advantage	2–5 business days	$8.60
Priority Mail	3 business days	$10.40
Priority Mail Express	1 business day	$44.90

These prices reflect standard retail rates, but lower commercial pricing may be available through tools like Shopify Shipping or by negotiating directly with USPS. For the most accurate quote, use the USPS Price Calculator.

FedEx Shipping Rates

Alongside USPS, FedEx (and UPS) is a leading choice for domestic U.S. shipments. FedEx calculates prices using dimensional weight, meaning the cost depends on both a package’s size and weight. The carrier also provides multiple delivery speeds, from ground to same-day.

Here’s an example of average retail shipping costs for a small package sent from New York to Chicago:

Service	Estimated Delivery Time	Rate
Ground	3 business days	$13.63
Express Saver	3 business days	$37.21
2 Day	2 business days	$40.94
Standard Overnight	1 business day	$90.32
Priority Overnight	1 business day	$103.28
First Overnight	1 business day	$139.55

These figures represent approximate retail rates. Lower costs may be available by using FedEx flat-rate options or signing up for a business account. For precise quotes, check the FedEx Rate Calculator.

Don’t Let Shipping Costs Eat Into Your Profits

Shipping expenses can quickly erode your profit margins—but with the right approach, you can keep costs under control. Use these tips to manage immediate shipping expenses while building a long-term strategy that saves money and improves efficiency.

Tools like Shopify Shipping give merchants access to heavily discounted domestic rates, helping you lower costs, speed up delivery, and provide a better overall experience for your customers.

Shipping Costs FAQ for Small Businesses

Why are shipping costs so high for small businesses?
Shipping expenses can add up quickly due to several factors, including package size, weight, air vs. ground shipping, labor, fuel surcharges, item value, and destination. Understanding these factors helps small business owners plan and reduce shipping costs effectively.

What is the cheapest shipping method for small businesses?
Shopify Shipping is a cost-effective solution that partners with major carriers like USPS, UPS, DHL, DPD, and Canada Post. It allows small businesses to access discounted rates, ensuring packages arrive on time without breaking the budget.

How can I pay less for USPS shipping as a small business?
To lower USPS shipping costs, use flat-rate or regional-rate packaging. Take advantage of USPS Cubic pricing for shipments under 20 pounds. This exclusive rate, available for Shopify merchants, helps small businesses reduce shipping costs for Priority Mail packages.

How can small businesses reduce shipping costs?
Effective strategies include:

Reducing package weight
Choosing the right-sized packaging
Using flat-rate shipping whenever possible
Leveraging Shopify Shipping for discounted carrier rates
Staying updated on carrier rate changes
Offering local delivery or pickup options

How do I calculate dimensional weight to reduce shipping costs?
Multiply the package’s length × width × height and divide by the carrier’s dimensional factor. This calculates dimensional weight, helping small businesses plan shipments efficiently and avoid unnecessary charges.

11 Proven Tips to Reduce Shipping Costs for Small Businesses