A handling fee is an amount charged to a customer on top of the order subtotal and shipping fees. It covers the cost of expenses related to fulfillment, such as warehouse storage cost, shipment cost, and packing cost. Handling fees are charged once per order but not to each individual product in an order.
TradeGecko’s inventory and order management software will help you automate your workflows so you can focus on growing your business.
Determine the average number of minutes it takes to prepare each item for shipping.
Divide the result by 60
Multiply the result by your hourly rate
For example, 10 minutes / 60 =0.16; 0.16 x $12 per hour = $2.00.
$2 is your handling fee on orders.
Handling fee calculator
To save you time, we have built a handling fee calculator for you:
If you fulfill orders on your own
If you are fulfilling orders on your own, you might not think to add handling costs, however, your time spent is valuable and an overhead to running the business.
Determine the time it takes you to pack an order. Then set the minimum amount you’re willing to earn per hour to pack the items—that’s your hourly rate. Finally, complete the same formula from above:
[Average number of minutes worked to package an item / 60] x hourly rate.
The result is your “opportunity cost”, which time you could have spent generating revenue. Use it as your handling fee on orders.
Shipping and handling fees need to be clearly labelled in your order invoices so that your customers don’t think you are overcharging them. With TradeGecko’s buildable order invoice capability you can add and remove shipping and handling fees to invoices easily.
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