Thread by @aaronreynolds

Some talk about shipping and customers and expectations.

Big retailers that have multiple warehouses to reduce shipping times and costs have created the impression that it is inexpensive to ship things, even internationally.

That’s not a complaint — I love free shipping —

It is, however, a challenge to the small business. Let me tell you about a conversation I have had a few too many times about the @EffinBirds deck of playing cards and its cost.

It usually starts with “why is this $20, I can have decks of cards printed for $5”.

Let’s set aside the nature of profiting from your work and just have a hard look at the numbers. I agonized over the price point for that deck, and used all my experiences so far to price it.

You can, in fact, get decks like this printed for $5. I paid a little less than that.

In fact, the highest estimate I had was for $7 a deck, from basically the Rolls Royce of playing card companies. I almost went for it, but I didn’t have $14,000 to tie up in the first round of production, and the final selling price — well, you’ll see in a moment.

There are some factors in play like exchange rates, but I’m going to call the cost on the decks $3.50 each. However, shipping from the manufacturer to me of a literal quarter ton of decks of cards was over $2000. 2000 decks, they’re all $4.50 each now.

$4.50 per deck — there was also tax and duty, so the landed cost per deck was about $5. Shipping envelope is about $0.25, shipping guy gets $1.25 for each thing he puts in an envelope (plus a weekly pay, but we won’t count that here because it covers other things.)

$6.50 cost.

$6.50. If I sell that for $13, I’ll do fine, and have enough to cover lost or damaged, returns, etc.

Now, how much does it cost to ship a deck of cards?

Turns out it costs between $6 and $11, with most of the world clocking in at $8.

I know from experience that few people will pay $8 to ship a $13 item.

“Shipping is almost half the cost of the item!”

I mean, yes? That’s a fact? I don’t set shipping rates?

So then it becomes this dance of positioning. We did a lot of math and a lot of looking at the worldwide distribution of Effin’ Birds shoppers to figure out what our likely average shipping cost would be. It was a little over $8. (This turned out to be a very accurate estimate.)

So we toyed with a $21 selling price with free shipping, which would get me my target profit. In the end I ate the $1 per deck to make it $20 and hoped that a lot of people would buy two decks (which cost the same to ship as one).

So when we break down that $20 price:

$9.50 shipping & packing
$6.50 landed item cost

The shipping greatly outweighs the item cost in the final price tag.

Yes, you can have a deck of cards made for $5. But you can’t get it anywhere.

So here’s a fun thought exercise: pins.

The actual cost of manufacturing the pins does not even register compared to shipping. It’s well under a dollar to make a pin. The shipping is $5-$9.

Would you buy a $3 pin and pay $8 in shipping?

This is a real thing that happened. A shipper who will not be named because they did a great job of apologizing blocked in a stranger’s driveway a few blocks away from my house with a mountain of boxes.

https://twitter.com/RexDartEskimoPi/status/1080508012849176579

So anyways, when pricing a product, my first act is to send the @EffinStork to the post office to get some shipping estimates.

This is all on my mind as we restructure shipping costs for effinbirds.com to take into account a product with a wilder shipping cost swing.