Five ways to reduce shipping costs for your small business

When you’re running a small business, shipping can take up a bigger share of your budget than expected.

The good news: there are practical ways to reduce shipping costs without hurting the customer experience. Start by understanding what drives your rates. Then choose the shipping strategy that fits your products, order volume, and budget.

Why is shipping so expensive?

Shipping costs can feel high because it takes people, equipment, transportation, technology, and delivery networks to move packages quickly and reliably. Your final cost can also change based on package size, weight, destination, delivery speed, and added services.

What’s actually affecting your shipping costs?

Before you make changes to your pricing, packaging, or fulfillment process, it helps to look at what’s driving your shipping costs.

A few common factors include:

Package weight and size

Heavier packages usually cost more to ship. Large, lightweight packages can also cost more because of dimensional weight, or DIM weight, which factors in how much space a package takes up.

Shipping distance

The farther a package travels, the more shipping zones it may cross, which can increase the rate.

Delivery speed

Expedited shipping services usually cost more than standard or ground shipping.

Packaging materials

Boxes, cushioning, mailers, labels, and other supplies can add to your total fulfillment costs.

Surcharges and extra services

Fuel, residential delivery, Saturday delivery, signature confirmation, oversized packages, and special handling can all affect the final shipping rate.

What are the best shipping strategies for small businesses?

Different orders call for different shipping strategies. Instead of using the same option every time, compare the package size, delivery timeline, and customer promise before choosing a service.

High-volume shippers

If your business ships frequently, you might qualify for even deeper shipping discounts with FedEx. Check with your account rep or pricing agreement for details on volume discounts.

Time-sensitive orders

Use expedited shipping when delivery speed is critical—for example, if you’re shipping perishable goods, urgent replacements, or premium customer orders.

Heavy products

For dense or heavy items, flat-rate shipping can help control costs.

Cost-focused shipments

When price matters more than speed, ground shipping is often the most affordable option for domestic deliveries.

Large but lightweight products

If your products take up a lot of space, optimize packaging to help reduce dimensional weight. Choosing a smaller box or mailer can help lower costs while still protecting the item.

International orders

Compare service levels, delivery times, customs requirements, and potential fees before choosing an international shipping option.

How can I get cheaper shipping rates?

Once you have a clear strategy, you can look for specific ways to save on shipping. Here are five strategies to get you started.

Lower your shipping costs with discounts

If you have a FedEx account, you may automatically qualify for discounted shipping rates. So step one is signing up for an account. Here are some additional strategies many small- to mid-size businesses use.

  • FedEx works with select professional organizations and industry groups to provide shipping discounts to their members. Talk with your rep about the Alliance program for details.
  • Some credit cards offer pre-negotiated shipping discounts and reduced shipping rates for cardholders. Check to see if yours does.
  • Sign up for FedEx Rewards and get perks when you ship, including name-brand gift cards, monthly bonus offers, and more.

Take advantage of free or discounted packaging supplies

Another way to keep shipping costs low is to cut packaging costs.

  • Buy packaging in bulk, especially if you ship the same types of items regularly. This can reduce packaging costs and help you forecast your shipping costs more accurately.
  • Use complimentary packaging materials to minimize packaging expenses and lower shipping costs. FedEx offers free packaging for FedEx expedited, FedEx Express Saver, and FedEx International Economy services.

Optimize your packaging

Examine your packaging choices. Small adjustments can help you reduce shipping costs and avoid unnecessary fees.

  • Use a box that fits the size of what you’re shipping. This can help you avoid higher shipping rates due to dimensional weight (DIM weight). Just make sure the box has room for protective packaging.
  • When you’re shipping heavy items, use flat-rate shipping to help you reduce costs.
  • Think outside the box, literally, and consider poly and padded mailers for soft goods. They can be more cost-effective than boxes.

Don’t pay for speed you don’t need

Not every order needs the fastest delivery option. Save expedited services for shipments where speed really matters, such as perishable goods, urgent replacements, or premium customer orders. For other orders, ground shipping can help you save.

Reduce extra fees

You may be able to reduce your small business shipping rates by choosing a different service level, adjusting package size, avoiding unnecessary add-ons, or creating a FedEx shipping account.

Keep reviewing your total shipping costs

Reducing shipping costs isn’t a one-time task. Your rates can change as your order volume, delivery locations, fuel surcharges, and customer expectations shift. Review your shipping costs regularly. Compare shipping rates and service options. And test packaging updates to find the cheapest shipping option that still meets your delivery needs.

Get more tips and information through our Small Business Center.

FAQs about how to reduce shipping costs