How to Calculate Handling Fees

by C. Taylor; Updated September 26, 2017

Shipping and handling covers the entire cost of shipping a product. The shipping part is easy to calculate, since it is the actual cost of the shipping fee, requested by the shipping company. The handling part is a little more complicated, because it encompasses every aspect of the packaging material, labeling and labor involved in the shipment. To calculate handling, you need to go over your material expenses and devise a per-shipment cost.

Instructions

Step 1

Calculate the cost of the packaging, such as boxes, mailers and envelopes. The cost should only include your expense for the single unit. As an example, if you purchased three boxes for a total cost of $1.50, then your cost for one box is $1.50 divided by 3, or 50 cents.

Step 2

Calculate the costs for protective supplies, such as bubble wrap or packing peanuts. For example, if you purchased a bag of packing peanuts for $10 and use a tenth of it per shipment, then your cost would be $1 per shipment for protective supplies. If you recycle your newspapers as box fillers, your protective supply cost is zero.

Step 3

Calculate your cost for labels, forms, tape and related material. Some multiple use items, such as markers, may not be worth calculating, since the cost per box may be less than a penny. You can calculate per shipment costs in the same way as before. As an example, a box of 100 labels that cost $5, would break down to five cents per label.

Step 4

Add in employee or personal costs as part of your overhead. For example, if you pay an employee $8 per hour to ship packages and the average shipment takes 3 minutes, then you would divide $8 by 20 to come up with forty cents for employee handling costs.

Step 5

Add all the costs to produce a total handling fee. In the examples, a fifty cent box, $1 in shipping peanuts, a five cent label and forty cents in employee costs would total $1.95 in handling frees.