---
title: "Shipping cost: definition, formula and example"
description: "What the carrier charges you to deliver a parcel. A cost per parcel set by weight and distance, whatever the customer was charged for shipping."
url: https://offersuite.io/glossary/shipping-cost
updated: 2026-10-13
---

# Shipping cost

What the carrier charges you to deliver a parcel. A cost per parcel set by weight and distance, whatever the customer was charged for shipping.

## In plain words

Shipping cost is what you pay a carrier to move a parcel from your warehouse to the customer. It is set by the parcel's weight, its size and how far it travels, and you owe it whether the customer paid for shipping or not.

It is usually the largest cost of a small order after the product, and the one a multi-unit offer saves most on. Three items in one parcel pay one label. That saving is most of the room a bundle discount has.

## Formula

- Shipping cost = the carrier's rate for the parcel's billable weight and zone × parcels

## Worked example

On an example rate card, one bag ships for $7.50 and three bags in one parcel for $10.10. The engine reads the label from the parcel's weight.

Send the same three bags in two parcels at a flat $7.50 label and the engine charges $15.00.

### The example order

A $40.00 bag of coffee, shipped free, every cost counted

Revenue $40.00 to contribution margin $15.36 (38.4%)

Revenue

$40.00

Cost of goods

−$12.00

Pick and pack

−$1.18

Packaging

−$0.50

Shipping label

−$7.50

Card fee per order

−$0.30

Refunds

−$2.00

Card processing

−$1.16

Contribution margin

$15.36

2 declared kinds cost nothing on this option

Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost.

## Shipping cost is not shipping revenue

What the customer pays for shipping is revenue. What the carrier charges you is cost. They are set separately and rarely match. Free shipping sets the first to zero and leaves the second untouched.

## Using it

Use your real rates for the weights and zones you ship most. A national average hides the zones that hurt. Recheck when the carrier's rates change, which is at least once a year, and when a product's weight or box changes. Then price free shipping as what it is: a decision about revenue, on top of a cost you pay either way.

## In Offer Suite

Offer Suite's engine charges a label per parcel, from a flat cost or from a table by the order's shipping weight. Once an order has shipped it can record what the carrier actually charged, which replaces the estimate.

Source: Offer Suite's margin engine and its cost grains.

## Related

- [Glossary **Glossary of offer economics** The terms behind offer profit, defined plainly with their formulas and a worked number: contribution margin, profit per visitor, break-even lift and more.](https://offersuite.io/glossary)
- [Calculator **Free shipping threshold calculator** Price a free-shipping threshold with the shipping you give away on orders that already reach it, and the share of smaller orders that must top up to pay for it.](https://offersuite.io/calculators/free-shipping-threshold)
- [Calculator **Bundle pricing calculator: shipping, subscriptions** Price a bundle against a single unit, one-time and subscribed, with the shipping and pick costs it saves, and the conversion it can lose and still earn as much.](https://offersuite.io/calculators/bundle-pricing)
- [Glossary **Fulfilment cost: definition, formula and example** What it costs to get an order out: pick and pack, extra picks, the box and the label. Charged per order or parcel, which is why bundles and gifts change it.](https://offersuite.io/glossary/fulfilment-cost)
- [Glossary **Billable weight: definition, formula and example** The weight a carrier charges for: the parcel's weight rounded up to the next step. A few ounces over a step costs the whole step.](https://offersuite.io/glossary/billable-weight)
- [Glossary **Shipping revenue: definition, formula and example** What the customer pays for delivery, after any shipping discount and before tax. It is revenue of the order, separate from what the label costs.](https://offersuite.io/glossary/shipping-revenue)