Understanding dimensional pricing and the implications DIM weight could have on your ecommerce fulfillment processes and ecommerce business model

1. Will It Be The End of Your Business?
WHAT IS DIMENSIONAL
PRICING?

2. How does pricing work now?
The historical way for calculating costs to
send a package was based on a very
simple method;
Carriers use a table that assigns a “base
rate” for every combination of weight (1-150
lbs.) and distance (Zones). The heavier the
package and/or the farther you ship, the
more it costs.
Other surcharges and fees are then added
to the base rate as they are applicable (E.g.
fuel surcharge).

3. Does it work?
Historically, this pricing
structure was ideal because
transport trucks could use
these same variables in
their formulas to calculate
transportation costs, and
therefore determine the
profit margin for each truck
transporting goods.

4. What is dimensional pricing?
In other words, many of the lightweight packages you
ship today could see A BIG INCREASE IN COST!!!
Every package you ship will now have two weights – actual
weight and dimensional weight. The larger of these two
will be used to calculate the cost of your shipment
(Height x Width x Length)
Dimensional Factor*
= Dimensional Weight
* The standard Dimensional Factor that UPS and FedEx will use is 166

5. Why the change?
The convenience of online shopping
with in-home delivery, has resulted
in an increase in the number of
lighter weight packages in bulkier
boxes being shipped to homes
across the world.
Consumers now purchase bath robes and teddy bears online!
Bigger boxes take up more room
in a truck; so less space and less
weight = less revenue per truck
for the carriers.

6. How will this affect my
shipping cost?
3 lbs. x Zone 8
$9.84
Base (Daily Pickup) Rate
3 lbs. package shipped in a 12” H x 12” W x 18” L box
From: Knoxville, TN (ZIP 37923)
To: Reno, NV (ZIP 89501)
TRADITIONAL
(12 x 12 x 18) / 166 = 15.6 lbs.
16 lbs. x Zone 8
$18.86
Base (Daily Pickup) Rate
DIMENSIONAL

7. 3 Questions to Consider
 What will my margins be if I eat the cost?
 If I pass this cost on to my customer – how
many will I lose?
 Will I still be in business 1 year from now?

8. Solutions
 Take the Air Out
 Negotiate your dimensional factor
 Find a partner with negotiating power (E.g.
a 3PL)

9. Take the Air Out
 Deliberately engineer packaging
to remove as much “air” as
possible.
 If additional packaging is added
when preparing to ship, educate
your packing team on the effects
of their decisions.
 This should be the first step for
any company looking to avoid large
dimensional weights
 You might be surprised how much
opportunity there is

10. Negotiate Dimensional Factor
 Larger Dimensional Factor
= Smaller Dimensional Weight
= Less Effect on Your Business
 Must negotiate with each carrier you use
(i.e. FedEx and UPS)
 There are no guaranteed
outcomes
 Shipping Revenue = Power

11. Find a strategic partner
 Quality 3PL fulfillment operations minimize
effect to their clients
 Strategic Partners help with these various
strategies
Examples:
 Negotiating power with
Carriers
 Package consolidation
 Packaging engineering

12. FOR HELP REDUCING COST
OF DIMENSIONAL PRICING
800.815.STAG (7824)
info@redstagfulfillment.com
www.redstagfulfillment.com