Combined Shipping Savings Calculator

Understanding the combined shipping savings calculator — concept and principle

When a customer buys several items, an online seller can ship them separately or pack them into one parcel. This calculator shows how much combining saves per order and per month. It works with any currency.

How it is calculated

Saving per order = cost of one single parcel × items per order − cost of one combined parcel

Monthly saving = saving per order × combined orders per month

• Shipping cost per single parcel: what it costs to send one item on its own.
• Cost of one combined parcel: what it costs to send all the items of the order together (usually more than one single parcel, because it is heavier or larger).
• Items per combined order: how many separate parcels the combined parcel replaces.
• Combined orders per month: how many orders are shipped this way.

The principle

Shipping prices have a large fixed part per parcel (handling, labelling, the minimum charge) and a smaller part that grows with weight and size. Sending three items separately pays the fixed part three times; one combined parcel pays it once. The saving is the difference between the cost of the separate parcels and the cost of the single combined one. The calculator assumes each separate parcel would have cost the same.

Worked example

1. Separate shipping: $6 × 3 items = $18 per order.
2. Combined parcel: $8.
3. Saving per order: $18 − $8 = $10.00.
4. Monthly saving: $10 × 400 orders = $4,000.00.

How to read the result

A positive saving means combining is cheaper; the larger the gap, the more room you have to pass part of it to customers as a shipping discount that encourages bigger baskets. Here combining cuts shipping cost per order by more than half (from $18 to $8). If the saving per order is small or negative, for example because the combined parcel crosses into a higher weight or size band, separate shipping may be fine. Subtract any extra packing or storage cost from the saving.

Common mistakes

• Using the list rate for single parcels but a negotiated rate for combined ones, or the other way round.
• Ignoring dimensional (volumetric) weight, which can make a large combined box cost much more.
• Leaving out packing material and labour differences.

Frequently asked questions

Should I pass the saving on to customers?

Many sellers share part of it, for example a reduced shipping fee for each extra item, to raise average order value while keeping some margin.

What is dimensional weight?

A billing weight calculated from parcel size. Carriers charge the higher of actual and dimensional weight, so bulky light parcels can cost more than expected.

Does combining always save money?

Not always. If the combined parcel moves into a much higher price band, or if waiting to combine delays delivery, the saving can disappear.

Sources: Council of Supply Chain Management Professionals (CSCMP), Supply Chain Management Terms and Glossary · Chopra, S. & Meindl, P., Supply Chain Management: Strategy, Planning, and Operation (Pearson)