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Do Your Clients Feel Nickel and Dimed?

I put out a call for open Q&A to my mailing list last week – if you’re not on the mailing list you can hop on over in the sidebar!  On to the questions:

Q: I was wondering how do you deal with a client who doesn’t want to or think that they have to pay shipping on a product or dvd if they want me to ship it to them?

I have a standard fee that if I ship a DVD it costs $7 (for packaging and actual shipping costs) they seem to think that there are much cheaper ways and that it should only cost me 50 cents as that is what it costs them to ship. (One client said that to me.) How do I say that I am a legit company and these are my pricing standards for shipping in a nice way?

- K. V.

There are two answers to this question:

1)  The price is the price is the price. 

It costs you X to package and Y to ship, period.  So if you’re firm about having them pay the shipping separately, then I would just email back and keep it very simple:  “In order to make sure the DVD gets to you safely and undamaged (and remains secure as you store it in your house), it costs $X to package it.  My business’s shipping source charges $Y to ship it, totaling the standard shipping cost of $7.  Once you send the payment, I’ll have it to you in a jiffy!  Thanks again!”  You can also mention any alternatives:  “You’re also welcome to pick up the DVD at my studio M-W, 9am-5pm.”  No need to feel defensive or argue the point – it is what it is, thanks (smile)!!

If the client persists in disputing the price, call them on the phone and repeat the above sentence in a cheerful voice.  And do listen to what they have to say – if they have a great idea for an alternative source (i.e. they know about some media mail deal that you weren’t aware of), you can consider whether that would work for you.  You may learn something new!  But just explain where the cost comes from and have that be the end of it.

It’s okay for them to ask questions, but it’s also ok to let them know that you are not pricing your shipping for profit – that’s just what it costs, and you’re eager to get them their products when they’re ready!

2)  Personally, I’d stop charging separately for shipping. 

It’s too big of a pain, and not worth making your clients feel nickel and dimed.  Paying separately for shipping is a downer – no one likes doing it, which is why places with free shipping like Zappos do so well.  Zappos doesn’t really have “free” shipping – the customers are paying for it, it’s just not a separate charge.  If someone is already spending hundreds of dollars for a disc of images (or other products), do them the courtesy of having already covered any extra charges in the original total.  It’s the mark of a fine brand to think of and include everything ahead of time.

And doesn’t it just make you happier to see signs like “Free Shipping” or “Complimentary Gift Wrap”?  It makes you feel taken care of – which is exactly how we want our clients to feel.

The pricing of your products should account for the cost of goods sold, as well as an allowance for the cost of doing business.  Maybe it does only cost that client 50 cents to ship something, but the actual cost to you is larger than just the packaging and whatever FedEx charges – there’s your time, gas, and wear and tear on your car of going back and forth to the post office.  Factor all that into the pricing of your products to start with.  My pricing includes a “delivery” allowance.  It’s a reasonable amount that covers me whether I deliver it myself (packaging, gas, time), or whether I drive it somewhere to ship it (packaging, gas, time), or whether I drop ship it (which costs more because I’m paying someone else to handle the packaging, gas, and time).  Any extra charges are for optional upgrades (i.e. overnight delivery), so they feel like the extra money is justified because it was an option that they “chose” to add on.

When you charge separately, you’re only opening yourself to scrutiny as to the cost of what you’re doing.  My product packaging is high end, and it’s part of the overall Jenika’s Lens experience.  You can bet, though, that if I started telling people “Okay, that’ll be an extra $20 for packaging and shipping” that they’d tell me they’d rather I just put their DVD in a Ziploc bag and slow boat ship it to them.  But that’s not the experience I want them to have, or the face I want to put on my brand.  So it all gets rolled in, and they’re happy.

If you charge extra for shipping because the majority of your clients pick up their products at your studio, and only a few opt for shipping, then when you tell people the total you can say “There are two options for delivery:  You can pick it up here M-W from 9-5, or I can ship it right to your front door for an additional $7.”  That way you’re framing the shipping as a convenience to them – if they want it for free they can swing by, or you can save them the trip at a small cost.  However, if you do ship or deliver most of your products, then I recommend including it in the overall pricing.

People attach themselves to original totals and go nuts when they have to pay extra for anything – no matter how small.  This is why people generally hate airlines, and why people love the few airlines that don’t “charge extra.”  The more you factor extra costs into the original pricing, the less hassle you’ll have, and the less of your life you’ll spend dealing with hagglers.  They can’t argue a separate charge when there isn’t one! :-)

Britt Anderson - Great advice…I too dropped shipping charges recently….1st, it didn’t seem fair to arbitrarily choose a number for shipping, when each order could be different and 2. it was too much of a hassle figuring out what gets charged what. So I figure it into my costs and ship for free!
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Jenika - Woo-hoo! I bet not one client complained, either! ;-) Thanks Britt.

Erin - I’ve always factored shipping and packaging into my prices – and clients have always been thrilled when they get a gift wrapped package in the mail! For really big products I drop them off in person – it ends up being cheaper than shipping and insurance anyway. I think it’s all about making it a high level experience and making them feel like they don’t have to lift a finger.

Jocelyn - Everything you said is so true Jenika…I really do appreciate free shipping when I’m doing any on-line shopping so I should apply that same logic to my business. On a similar vein, I tend to get a fair number of clients that are in a particular region about an hour from where I live. I’ve started not even talking about travel costs. I think it will all work out with print sales as I’ve recently overhauled how I am doing that (just switched to digital from film recently). The one question I have about shipping is if a client places a very small order, say a couple of 5×7′s. I’ve had an experience in which the family had placed their order but then the grandparents ended up wanting two 5×7′s. I had to pay the shipping cost from the lab as well as the cost of shipping to the client. In the end, my profit on that particular sale was really affected. My solution was to place a shipping fee on orders under $250. Do you think that is nickel and diming it in the same way you talked about in your post?
Thanks for another though-provoking discussion!
Jocelyn

Jenika - Hmm. I personally wouldn’t, because I wouldn’t want to come off like I’m trying to make people order any certain amount (and having a penalty for placing a small order may come off that way – people hate extra charges). If your main clients usually place larger orders and the issue here was just the grandparents, then I would probably have a policy that there is free shipping on the first order on those photos, and paid shipping on any subsequent orders under $250. That way they have motivation to get their stuff together (and grandma has motivation to make her decision and place her order with mom and dad). You could explain that family members can avoid additional shipping costs by placing their order all together.

Those are my thoughts anyway! You do what seems best for your business and clients.

Michelle McDaid - I provide free, overnight shipping for all orders over $200. I think it has to make sense based upon your pricing.

Jenika - That makes sense. Solid advice.

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