Handling fee calculator

3 min read
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Today's customers often hold certain expectations when it comes to shipping and handling – they want it free. To the point where some customers will choose a more expensive product if it comes with free postage, or will abandon their cart and shop elsewhere to find free shipping and handling. However, businesses still have to account for shipping and handling fees.

However, just because the fee is waived for customers doesn’t mean the fees are waived for you. By calculating the handling fee of your products, you can choose to factor it into product price or charge a separate shipping and handling fee - depending on how the cost affects your business and products. The first step is understanding the fee. Our handling fee calculator can take out the guesswork!

Handling fee

What is a handling fee? 

A handling fee is charged on top of a customer's subtotal and shipping costs. It costs money to fulfil orders, from warehouse storage to packaging costs and the cost of shipping. Handling fees are charged by the order, not based on the individual products within the order. 

You may also charge for shipping within a handling fee. Though this will increase the cost and may make shopping with you seem more expensive than shopping with your competitors. Some businesses choose to factor packaging materials in with the ship and handle fees. 

How to calculate the handling fee 

How do you calculate shipping and handling fees? You can choose to use a shipping and handling costs calculator or calculate it manually with our formula below: 

To calculate handling charges using the formula: first, calculate the average number of minutes to pack an order. Divide this by 60 and multiply it by your team's hourly rate. 

For example, 15 minutes / 60 = 0.25; 0.25 x 20 per hour = 5.00 

A handling fee of 5 covers the cost of what it takes to package an item. 

Or you can use the above handling fee calculator to determine your shipping and handling costs. It will calculate shipping and handling fee for you, saving you time, energy, and headaches. Your shipping fees depend on which service you use, but also on dimensions, weight, speed, and delivery distance. 

How to use the handling fee calculator 

You don't need to struggle with a formula to calculate shipping and handling. That's time you could have spent on aspects of your business that are important to you. Instead, you can use our handy calculator to do the maths for you. 

To use the calculator, you need to first determine how long it takes to prepare a package. Once you have this figure you can input it into the calculator along with the hourly rate you pay your employees. The calculator will provide you with your opportunity cost, which is what you charge as a handling fee. 

How QuickBooks can help

QuickBooks removes the guesswork and manual calculations from the process of tracking orders, finances and other accounting. It can be used to save you time and improve your bottom line. Visit our pricing page to get started. 

Visit our free tools and templates hub to find more free assets that can help you run and grow your business. 

Frequently asked questions

What is a handling fee?

It's the charge you levy on top of the customer's product and shipping cost to cover fulfilment.

Why is a handling fee necessary?

A handling fee is necessary for a business to maintain their profit margin by covering the additional cost related to making sales. It factors in labour, fulfilment, packaging costs, and storage costs.

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