The Pros and Cons of Flat-Rate Shipping

Are you looking to save some money and improve the efficiency of your shipping operations? You’ve probably come across flat-rate shipping as a potential option, but you might not be sure when this option is ideal. Flat-rate shipping is a highly cost-effective and efficient shipping method in certain instances. However, it’s not a one-size-fits-all option. You have to consider the benefits within the context of your shipping needs.

Here, we’ll highlight the pros and cons of flat-rate shipping so you can make an educated choice for your business.

Pros of Flat-Rate Shipping

There are several advantages to flat-rate shipping to keep in mind when determining the best shipping strategies for your business.  Flat-rate shipping is a service that allows you to ship any parcel product that can fit inside a specific specification at a set flat rate.  This is typically a box, and with less to worry about with packaging, there are some upsides many businesses take advantage of.  Here are three of them.

Easier Way to Predict Shipping Expenses

No matter the size of your operations, the fluctuation in shipping costs is a considerable barrier. If you always have to guess what shipping costs will be, you have less room for taking calculated risks. With flat-rate shipping, you can know exactly how much you’ll pay for shipping.

Set pricing brackets break down the cost by a single factor of packaging compared to the many factors considered in a traditional ground shipping agreement. Continuing to simplify this option is the fact that it is genuinely a single pricing factor, as even most accessorial charges are obliterated. This option can be great for controlling internal service-level decisions, decreasing transit time, and allowing for minimized training time (soft cost reduction). In addition, this makes it easier to manage a healthy cash flow.

Streamline and Simplify Promotions

This is especially great for e-commerce shops.  Offering exclusive deals and limited-time offers is a fantastic marketing method, but highly volatile shipping costs can make it impossible to leverage this strategy.  Flat-rate shipping ensures your costs don’t change, so you can more easily offer discounted rates, free shipping, or other promos while maintaining your profits consistently. 

Carrier-Supplied Packaging Availale

Branded packaging, however great for an unboxing experience in e-tail shops, is an additional expense.  If what you are shipping will not benefit from a custom or branded package, then carrier-supplied packaging is a simple option.  Fortunately, many flat-rate shipping providers offer their packaging solutions too. This way, you can get your products shipped out quickly to your clients while doing less work overall. It’s the perfect way to reduce the burden on your team while improving the customer experience.

Cons of Flat-Rate Shipping

Flat-rate shipping is great in many ways, but it’s not a cure-all for your shipping woes. There are some disadvantages to this type of shipping that businesses should be aware of.

Limited Branded Packaging

Shipping is an excellent opportunity for companies to promote their brands to customers further. However, when relying on a supplier’s packaging services, you lose out on this chance. It’s not a significant loss, especially if you’re advertising and marketing differently, but a downside to consider.

More Expensive in Some Cases

The most significant benefit of flat-rate shipping is its potential to save you considerable money on shipping costs. This isn’t automatically the case, however. For example, you could end up overspending on shipping if the flat-rate expenses are more than what you could negotiate otherwise.  Unless every single SKU is exactly the same and will always ship the same, then there will be cases where you could have saved on a traditional ground shipping option.

Finding an Optimal Shipping Design

Flat-rate shipping is not for everyone. However, with higher general rate increases each year and more uncertainty around shipping, simplifying your shipping process with flat-rate options may be the way to go. First, review what’s suitable for your business and customers.  The optimal solution is to honestly and accurately understand your needs and build for those.  A well-tailored agreement can contain both flat-rate AND traditional pricing options in a beneficially compounding way.  Contact us today to find out how.