Who this is for
Shopify store owners setting up shipping or looking to reduce shipping costs. Whether you're choosing between carriers, confused by dimensional weight, or trying to offer free shipping without losing money, this guide covers the practical details.
See your real Shopify margins
Calculate profit after payment fees across Basic, Shopify, and Advanced plans.
The goal
Understand how Shopify shipping works so you can minimize costs and maximize margins. By the end, you'll know exactly what discounts you qualify for, how to avoid dimensional weight surprises, and whether third-party shipping apps are worth it.
Quick summary: Shopify shipping discounts
| Plan | USPS Discount | UPS Discount | DHL Express Discount |
|---|---|---|---|
| Basic | Up to 77% | Up to 55% | Up to 76% |
| Shopify (Grow) | Up to 88% | Up to 69% | Up to 76% |
| Advanced | Up to 88% | Up to 69% | Up to 76% |
These are negotiated rates through Shopify Shipping—significantly better than what you'd get walking into a carrier location. The catch: you must buy labels through Shopify to get these rates.
How Shopify Shipping works
Shopify Shipping is built into your admin. You buy discounted shipping labels directly from Shopify, which has negotiated bulk rates with USPS, UPS, and DHL Express.
What you get
- Discounted rates — 55–88% off retail carrier prices
- Label printing — Buy and print labels from your Shopify admin
- Tracking — Automatic tracking updates sent to customers
- Package pickup — Schedule carrier pickups from your location
- Insurance — Available for purchase on qualifying shipments
What you don't get
- FedEx integration — Not included in Shopify Shipping (requires third-party app)
- Regional carriers — OnTrac, LSO, and others require apps
- Negotiated rates from your own carrier accounts — Shopify rates are fixed; you can't bring your own UPS discount
Carrier options
USPS (best for lightweight packages under 1 lb):
- First Class Package: Up to 67% off
- Priority Mail: Up to 88% off
- Priority Mail Express: Discounted rates
- Ground Advantage: Discounted rates
UPS (best for heavier packages and reliability):
- Ground: Up to 55% off
- 2nd Day Air: Up to 69% off
- Next Day Air: Up to 69% off
- Worldwide Expedited: Up to 86% off
DHL Express (best for international):
- Worldwide: Up to 76% off retail
- Fastest international option for most destinations
See your real Shopify margins
Calculate profit after payment fees across Basic, Shopify, and Advanced plans.
Dimensional weight explained
Carriers charge based on whichever is greater: actual weight or dimensional weight. This catches sellers off guard when shipping large, lightweight items.
The formula
Dimensional Weight = (Length × Width × Height) ÷ DIM Factor
DIM factors by carrier
| Carrier | DIM Factor | Notes |
|---|---|---|
| USPS | 166 | Only applies to packages over 1 cubic foot |
| UPS | 139 | Business rates; 166 for small packages under 1 cu ft |
| FedEx | 139 | Standard for most services |
| DHL | 139 | International shipments |
Example calculation
A box measuring 18" × 12" × 6" containing a 2 lb item:
DIM Weight = (18 × 12 × 6) ÷ 139 = 9.3 lbs
Even though the item weighs 2 lbs, you'll be charged for 9.3 lbs. This is why packaging matters—use the smallest box that safely fits your product.
When USPS ignores DIM weight
USPS only applies dimensional pricing to packages exceeding 1 cubic foot (1,728 cubic inches). For smaller packages, you pay based on actual weight only. This makes USPS ideal for compact, lightweight items.
Calculated shipping at checkout
Instead of flat rates, you can show customers real-time carrier rates at checkout based on their location and order contents.
Plan requirements
| Plan | USPS/Canada Post | Third-Party Carriers (UPS, FedEx) |
|---|---|---|
| Basic | Free | Not available |
| Shopify (Grow) | Free | ~$20/month add-on or annual billing |
| Advanced | Free | Included |
Setup requirements
For accurate calculated rates, every product needs:
- Weight — Actual shipping weight including packaging
- Dimensions — Length, width, height for DIM weight calculation
Missing this data? Your calculated rates will be wrong, leading to either overcharging customers or eating shipping costs yourself.
Adding handling fees
You can add a flat fee or percentage markup to calculated rates. This covers:
- Packaging materials
- Labor time
- Buffer for rate fluctuations
Most sellers add $1–3 flat or 5–15% markup to break even on packaging costs.
Free shipping strategy
Free shipping increases conversions, but giving it away on every order kills margins. The solution: free shipping thresholds.
Calculating your threshold
Formula: Set your threshold 20–30% above your Average Order Value (AOV).
If your AOV is $45, set free shipping at $55–60. This encourages customers to add items to reach the threshold.
Break-even calculation
Before offering free shipping, know your break-even point:
Required Extra Revenue = Average Shipping Cost ÷ Profit Margin
Example: If shipping costs $8 and your profit margin is 40%:
$8 ÷ 0.40 = $20 additional revenue needed
You need customers to spend at least $20 more to cover the "free" shipping. Use our Shopify Profit Calculator to model different scenarios.
Common thresholds
- $35–50 — Low-margin products, impulse purchases
- $50–75 — Most e-commerce stores
- $75–100 — Premium products, higher AOV stores
- $100+ — Luxury brands, B2B
Third-party shipping apps
Shopify Shipping works for most stores, but third-party apps offer additional features and sometimes better rates.
When to consider an app
- You need FedEx integration
- You ship high volume (1,000+ orders/month) and want rate shopping
- You need automation (rules, batch processing, returns)
- You sell on multiple channels and want unified shipping
Top shipping apps
| App | Starting Price | Best For |
|---|---|---|
| ShipStation | $9.99/mo (50 shipments) | Multi-channel sellers, automation |
| Easyship | Free tier available | International shipping, rate comparison |
| Shippo | Free tier available | Simple rate shopping, USPS discounts |
| Pirate Ship | Free (pay per label) | Budget-conscious, USPS-focused |
Do apps have better rates?
Sometimes. Third-party apps negotiate their own carrier rates. For USPS specifically, Pirate Ship often matches or beats Shopify's rates with no monthly fee. For UPS and FedEx, rates vary—compare before committing.
Reducing shipping costs
1. Right-size your packaging
Every extra inch adds cost. Use packaging that fits your products with minimal void fill. Consider:
- Poly mailers for soft goods (lighter than boxes)
- Custom box sizes for your most common products
- Padded flat rate envelopes for small, heavy items
2. Negotiate with carriers
Once you ship 500+ packages monthly, contact carriers directly for account-level discounts. These stack with or replace Shopify's negotiated rates.
3. Use regional carriers
For specific regions, carriers like OnTrac (West Coast) and LSO (Southwest) offer lower rates than national carriers. Requires third-party app integration.
4. Batch your shipments
Printing labels in batches and scheduling pickups is faster than individual trips to the post office. Shopify supports batch label printing natively.
5. Offer local pickup
For local customers, offer free pickup to eliminate shipping costs entirely. Shopify has built-in local pickup functionality.
FAQ
How much does Shopify Shipping cost?
There's no fee to use Shopify Shipping—you just pay for labels at the discounted carrier rates. A USPS First Class label might cost $4–6, Priority Mail $8–15, depending on weight and distance.
Can I use my own carrier account with Shopify?
Yes, but you won't get Shopify's negotiated discounts. You can connect your own UPS or FedEx account for calculated rates at checkout, but you'll pay your account's rates, not Shopify's.
Which Shopify plan has the best shipping discounts?
Shopify (Grow) and Advanced have the highest discounts (up to 88%). Basic is slightly lower (up to 77%) but still significantly better than retail rates. The plan difference matters more for UPS than USPS.
Is Shopify Shipping available internationally?
You can ship internationally using Shopify Shipping, but you can only buy labels if your store is based in the US, Canada, UK, France, Italy, Spain, Germany, or Australia. DHL Express offers the best international rates through Shopify.
How do I handle returns?
You can create return labels through Shopify at the same discounted rates. Some sellers include a prepaid return label in the box; others generate labels on request. Third-party apps like Loop or Returnly offer more advanced returns management.
Should I offer free shipping?
If your margins support it, yes—free shipping increases conversion rates by 20–30% on average. Use a threshold to protect margins on small orders. See our free shipping strategy section above.
What's the cheapest way to ship on Shopify?
USPS First Class (for items under 1 lb) or USPS Ground Advantage (for heavier items) through Shopify Shipping. For very lightweight items, First Class can be under $4.
Next steps
- Calculate your margins with our Shopify Profit Calculator — factor in shipping costs to see real profit.
- Understand your plan costs with our Shopify pricing plans guide.
- Optimize product pages with our Shopify product page SEO guide.
- Compare platforms with our Shopify vs Etsy comparison.
See your real Shopify margins
Calculate profit after payment fees across Basic, Shopify, and Advanced plans.
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