Shipping costs are determined by package weight, dimensions, courier zones, packaging, and surcharges.
Hidden shipping costs can quietly kill your margins — especially in NZ, where rural surcharges, packaging quirks, and courier fees stack up quickly.
This guide walks you through how to calculate real shipping costs using your own product data, so you’re not flying blind.
If you want to streamline manual admin and work smarter, Zappy can automate rate comparisons, highlight hidden surcharges, and display true per-order costs in real-time.
We’ll cover that below — but let’s start with the basics:
It’s crucial to calculate shipping costs accurately
Even small miscalculations (a box that’s 2cm too tall, or a missed rural surcharge) can add up fast when you're scaling from 5 – 10 to 50 – 100 orders a week.
Here’s what’s at stake (and it’s not just margins):
- Undercharging eats your margin (obviously): a product that looks profitable on paper can quietly become a loss-maker if you’re not factoring in the total cost of shipping.
- Unexpected shipping costs kill conversions: carrying the cost of shipping to customers at checkout may seem like a good solution, but 48% of shoppers abandon carts due to shipping charges they didn’t see coming.
- Inconsistency erodes trust: unclear pricing leads to “why is this $5 more?” queries and more resources spent on customer support.
Knowing your true shipping costs puts you in control.
When you understand what contributes to those charges, you can make informed decisions on how to cover shipping costs for your business – eg. setting flat rates that cover the average cost, setting a free shipping threshold, or passing individual costs through to customers at checkout.
The factors affecting your shipping costs
Let’s break down what factors influence shipping costs for your e-commerce business:
Actual vs. volumetric weight
Couriers charge whichever is higher:
- Actual weight: e.g. 1.2kg parcel
- Volumetric weight: (Length × Width × Height in cm) ÷ 5000
Here’s a classic example:
A shoebox (30×25×15cm) = 2.25kg volumetric weight.
If the actual weight is 1.2kg, you’ll still pay the 2.25kg rate.
Shipping zones
Where you’re sending parcels has a significant impact, too. Courier pricing in New Zealand is highly zone-based.
- NZ to metro NZ is usually your cheapest bracket
- NZ to rural can easily add $4–$7 per parcel in surcharges, depending on the courier
- NZ to Australia adds complexity: international rates, fuel charges, and customs clearance
- International (beyond AU) means higher base rates and added customs documentation requirements
If even 10–20% of your customers are rural and you're not accounting for that in your pricing model, your margins are likely being eaten.
How to keep track: Use delivery reports or platform analytics to segment costs by zone. Zappy shows courier zones and rates up front, which is especially helpful if you’re branching out to shipping internationally or across the ditch to Australia.
Delivery speed
Time is money. Express and overnight delivery options often come at 2–3x the price of standard services.
This becomes a real margin issue when:
- Customers choose express shipping, but you're undercharging for it
- You offer one rate across all orders without factoring in delivery timeframes
For example, if you're selling perishable goods or time-sensitive gifts, faster delivery might be part of your core value — but it needs to be priced accordingly.
On the other hand, if you sell durable items like phone cases or t-shirts, customers may be happy to wait 2–3 business days if it means paying less.
How to keep track:
Run periodic checks on which delivery speeds are most commonly selected by your customers.
Are you losing money on fast shipping options?
Are customers actually using these options?
Zappy’s rate comparison tool helps you automatically offer both standard and express options, and ensures you’re charging appropriately based on real courier data.
Courier rates and surcharges
Courier pricing isn’t just the base rate you see on the booking screen. Many platforms only surface the cost to ship from A to B, but the real charges show up later on your invoice.
Typical extras include:
- Fuel surcharges
- Rural delivery fees
- Redelivery or missed delivery charges
- Signature on delivery or specific delivery windows
- Saturday or after-hours fees
These costs hit hardest when you're scaling. A few dollars here and there on each parcel might seem manageable at 10 orders a week — but becomes a significant drag on profit at 100+.
If you're shipping high-value or fragile items that require tracking and signature, these charges are unavoidable — but they need to be priced into your product or shipping fees.
If you're selling low-cost goods with tight margins, even a small fee can tip the order into unprofitable territory.
How to keep track:
Use a platform like Zappy that shows the true total cost — including rural fees, extras, and surcharges — before you confirm the shipment.
Packaging and handling costs
Packaging is one of the most overlooked expenses in e-commerce, especially when your business is just starting and buying materials ad hoc.
But it’s a key part of your per-order cost, and it scales with every sale.
Packaging costs to account for:
- Consumables: Boxes, poly mailers, labels, tape, bubble wrap, tissue, void fill
- Tools: Label printer, scales, box cutters
- Labour: Your own time, or staff time if someone else is doing fulfilment
If you’re shipping large or oddly shaped items (homewares, gifts, food hampers), you’ll pay more in packaging and often in dimensional weight.
If your items are small and uniform (cosmetics, accessories), packaging can be standardised and bought in bulk, which dramatically lowers costs over time.
Set a baseline cost per order — even if it’s just a rough average across your packaging types.
Zappy can help reduce shipping costs by suggesting packaging size options based on your products and order history, reducing void space and dimensional weight over time.
How to calculate your shipping costs
You don’t need to become a logistics expert. But you do need a system that tells you: “It costs me $X to send this product to this type of customer.”
Here’s a practical process to get there, using tools you probably already have — and platforms like Zappy to handle the grunt work.
1. Weigh a typical packed order
Use a digital scale. Weigh the product with its packaging — box, tape, label, everything. This is your actual weight.
2. Measure the parcel dimensions
Use a ruler or tape measure. Multiply length × width × height (in cm) and divide by 5000 to get volumetric weight.
Couriers charge whichever is higher — weight or size — so record both.
3. Check courier pricing for common zones
Use Zappy (or your courier account) to get a real quote to:
- Local metro (e.g. Auckland to Wellington)
- Rural areas
- Australia (if you ship internationally)
Record what each costs. Include the economy and express options.
4. Add your packaging material costs
Roughly estimate per order:
- Box or mailer
- Label and tape
- Void fill (e.g. $0.50 worth of bubble wrap or kraft paper)
Even better: keep the receipt from your last packaging purchase and divide it across your typical number of orders.
5. Account for surcharges
Depending on what you offer, you may need to factor in:
- Rural delivery fees ($4–$7)
- Signature on delivery
- Customs charges
Zappy shows these fees up front so you’re not surprised later.
6. Calculate your cost range
By continually recording these figures over time, you can establish a lower and upper limit calculation for shipping costs:
- Best-case: Metro NZ, light parcel, no extras
- Worst-case: Rural NZ, heavy box, signature required
This tells you what it actually costs you to ship — not just what the courier page said, and not what you’re guessing based on past orders.
7. Consider your shipping rates to customers
With real numbers in hand, you can start to consider:
- Do and should you charge customers a flat rate for shipping?
- Is it financially feasible to offer free shipping over a certain threshold?
- Pass through the cost based on delivery speed or region?
Make it consistent, transparent, and aligned with your margin.
8. Review and update every few months
Shipping prices change. Your average order size might change too.
Block time once per quarter to spot-check your most common parcels and update your average shipping costs.
Remember: You can’t optimise what you don’t measure.
Most small e-commerce businesses bleed profit on shipping costs simply because they’ve never worked out what it actually costs them per order.
This exercise gives you the baseline you need to:
- Set shipping prices with confidence
- Offer free shipping only when it’s viable
- Spot if couriers are overcharging you
- Automate rate selection with tools like Zappy?
When should you offer flat rate or free shipping?
Getting your shipping pricing strategy wrong doesn’t just hurt sales — it can quietly wreck your profit on every sale.
Here’s how to make it work in practice:
- A flat shipping rate works well when your product line is fairly uniform in size and weight. Think clothing, books, or small electronics. You can safely charge a fixed rate without taking a hit on most orders.
- Free shipping needs to be funded somehow — usually by setting a minimum spend. “Free shipping over $99” encourages higher average order value (AOV) while keeping your costs manageable. You’re not absorbing the shipping cost, you’re building it into your margin.
But don’t just pick a number out of thin air. Use your actual average shipping cost (see the calculation section above). If it costs you $8.40 per order to ship most parcels, set your pricing rules accordingly.
Let’s use an example:
A skincare business might discover that their average NZ metro shipping cost is $7.80, and rural is $12. Instead of offering universal free shipping, they might:
- Set a free shipping threshold at $120
- Charge a $5 flat rate under that
- Clearly communicate a $4 rural surcharge at checkout
That’s transparent for customers, fair for the business — and doesn’t bleed margin.
How Zappy helps you calculate and manage shipping costs
Let’s be honest, most small ecommerce owners don’t have time to manually track shipping variables across zones, couriers, and order types.
But without knowing these numbers, you’re either undercharging and losing money, or overcharging and potentially losing customers.
Zappy removes the guesswork.
Here’s how it helps you track and manage shipping costs with less effort:
See live courier rates from domestic and international carriers
No need to maintain separate accounts or negotiate rates.
Zappy gives you access to pre-negotiated rates with major domestic and international couriers, so your e-commerce business gets competitive shipping prices without needing to negotiate contracts yourself.
Surcharge transparency
Rural delivery, fuel charges and other extras are shown before you confirm the courier booking.
Smart packaging suggestions
Based on order data, so you minimise volumetric weight and stop shipping air.
Per-order cost tracking and reporting
See your average cost per order over time, broken down by zone, speed, and courier.
Zappy integrates seamlessly with major e-commerce platforms like Shopify, WooCommerce and even TradeMe, so you can manage orders and shipping in one place and spend less time on manual admin.
Branded order tracking and customer comms
Reduces support tickets by providing customers with a tracked experience, supported with your branding.
Providing order tracking is table stakes for e-commerce businesses – your customers expect it, and you should see it as an important opportunity to boost customer loyalty.
Free to use
No monthly fees, just pay for what you ship.
Instead of reacting to courier invoices at the end of the month, you’ll have the data to set better pricing, offer smarter shipping options at checkout, and protect your margins from day one.
And if you need help, you're not logging a ticket into a global shipping app — you're talking to a real person who understands the NZ market and your business.
See Zappy’s guide on reducing shipping costs for more strategies to turn shipping from a cost centre into a conversion tool.
Shipping cost FAQs
What’s the easiest way to calculate my shipping cost?
To calculate shipping cost, you first need to know the courier’s rate table (which charges based on either the actual weight or the volumetric weight, whichever is greater). An easy way to do this without contacting multiple couriers is to use a shipping aggregator like Zappy, which shows you pre-negotiated courier rates and automatically applies the correct calculation for each parcel.
Can I estimate shipping cost without a scale?
Not accurately. Try measuring a few packages manually, then confirm your estimates with a courier’s online calculator.
Do I need to include packaging in my shipping cost?
Yes — it’s part of your fulfillment expense. Include box, tape, label, and any other packaging in your cost-per-order calculation.
How does Zappy help with shipping cost estimation?
Zappy integrates with your e-commerce platform and pulls product weights and packaging profiles to help you estimate costs more accurately.
