For any business to be successful with an online ordering system, they have to be able to factor postage costs into their pricing. However, postage costs in the UK vary considerably from parcel to parcel even if you always use the same courier. You need to be able to take multiple different factors into account to make sure that you get the best postage rate and that you charge your customers a fair amount.

Factors affecting postage costs

Basic postal rates are driven up and down by a few different factors. It’s always going to be more expensive to send a bigger parcel than a smaller one, but the postage cost that you end up paying will also be affected by the kind of service that you want in return. Here are a few things to consider:

  • - A parcel's dimensions - The length, width and height of a parcel will all need to be taken into account. This is why it’s important to be able to order bespoke boxes for your products that are no larger than they need to be.
  • - A parcel's weight - Along with the dimensions, weight is an important factor. There won’t necessarily be a lot that you can do to change a package’s weight as it’s often dictated by the product you’re sending, but you might want to think about the best way to divide up multiple products that are included within the same order.
  • - The value of the items being sent - It’s important that the postal service you choose is equipped to handle the value of item that you want to send. Royal Mail compensation rates differ based on the service you choose; more expensive services will get you more compensation. Other services will allow you to add additional cover if the product’s value is over the included compensation limit.
  • - How fast you want the parcel to arrive - The bottom line is that you should be able to fulfil the delivery times that you promise to your customers, whatever that may be. Different services will deliver your parcel in different time frames, but the faster you want it to arrive the more expensive it’ll be.

Royal Mail's postage costs

Royal Mail’s parcel postage costs start from £2.95 to send a small parcel second class and increase from there. We’ll start by taking a look at their size classifications:

  • - Small parcel - Up to 45cm long, 35cm wide, 16cm thick and 2kg in weight.
  • - Medium parcel - Up to 61cm long, 46cm wide, 46cm thick and 20kg in weight.
  • - Large parcel - Up to 5m length and girth combined and 30kg in weight. These can only be sent by Parcelforce Worldwide (through Royal Mail).

The pricing structure is based on parcel size and weight, featuring four main postal classes: 1st class, 2nd class, 1st class signed for and 2nd class signed for. It’s also worth noting that discounts are available for businesses that meet certain thresholds.

1st class

Compensation: £20
Small cost: £3.45 to £5.50
Medium cost: £5.75 to £33.40

2nd class

Compensation: £20
Small cost: £2.95
Medium cost: £5.05 to £28.55

1st class signed for

Compensation: £50
Small cost: £4.40 to £6.50
Medium cost: £6.70 to £34.40

2nd class signed for

Compensation: £50
Small cost: £3.90
Medium cost: £6.00 to £29.55

Royal Mail has an additional service, express 48, that is fulfilled through Parcelforce Worldwide. This service has £100 compensation as standard (with up to £2500 available in add-ons), full tracking and size limits of a combined length and girth of 3m. Prices range from £11.99 for a 2kg parcel to £43.78 for a 30kg parcel, with the option to add on additional kilograms for £1.50 each.

Royal Mail vs other couriers

We’ve focused on Royal Mail so far because they’re by far the largest postal service in the UK and the most accessible to businesses and individuals of all shapes and sizes. However, they’re not the only option out there. There are multiple logistics companies that will provide many comparable services, allowing you to compare prices, delivery times and compensation rates.

Couriers will all operate in slightly different ways, but most will offer some form or combination of collection and drop off services for you to get your parcels to them. It’s worth noting that Royal Mail also has services geared towards regular senders, including their drop and go, which allows you to process the details and payments for parcels away from the Post Office then drop them at a fast track counter to speed up the whole thing.

It’s worth comparing quotes from a few different couriers before committing. Royal Mail is a familiar and reliable option but by no means the only viable choice.

Factoring postage costs into your pricing

It is essential that you factor postage costs into your product pricing. Whatever you pay for postage will come out of the profit that you can make on that item. Setting your prices high will help you to cover the costs more easily, but can lead to cart abandonment in the checkout process. However, if you set postage too low and don’t account for in the product’s price, you’ll risk slashing the money that you can make from selling that product.

Online sellers need to find the balance between being competitive and realistic in their pricing. Most sellers are up against tough competitors and need to do what they can to keep prices low, but it’s important to keep your own business’s needs in mind. If you’re finding that your postage costs are too high to keep up with competitors it might be worth looking to see if there’s another courier that can provide a cheaper service.

Remember, buying the right boxes is critical if you want to minimise your postage costs. Check out Boxtopia's extensive range of cardboard boxes available to order today, or use our box calculator to build your own.