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Comment by imgabe | Hacker News Reader

I didn't think shipping companies were just delivering packages out of the kindness of their hearts. I just expect it to be included in the purchase price. I'd much rather have one price to consider rather than a really low initial price with a bunch of additional charges.

As a customer, adding a bunch of additional fees, even if they're reasonable, just makes me feel like I'm being nickel-and-dimed. Tell me the total amount you want me to pay you to get what I want and if it's in my price range I'll happily pay it.

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Exactly this. It's not free to sell something from a physical shop either, but I don't get charged a "physical shop fee"; they just build it into their markup.

Sadly, more and more physical stores are starting to charge for the costs of shopping there, too. "Credit card surcharges" were the beginning; now I'm seeing "debit card surcharges," a $0.25 fee to write a check, charging for bags (and not just in cities with a disposable bag ordinance), and so on. I can't wait until my receipt includes an "electric company usage fee" and "background music from Spotify contribution charge."

>adding a bunch of additional fees [...] just makes me feel like I'm being nickel-and-dimed.

On the other hand, when I know the shipping costs are included in the price, it makes me feel like I'm being gouged on larger orders where the shipping cost per item should be lower.

That's what Jet.com tries to solve. Initially the prices you see have built in shipping (although $35 minimum), but as you spend more they give you discounts inline with their savings.

Jet.com isn't perfect but they're trying some interesting stuff with pricing (e.g. pay more for included returns, or pay less but have to pay shipping if you return, buy items in bulk and get a discount, etc).

The idea and the promise of Jet was great, the initial implementation from both the vendor and consumer points of view were a complete train wreck that turned me away from the site. Not sure that there's going to be much left after the Walmart acquisition?

A lot of the site has changed since launch, I'd encourage you to give it another look. And don't worry, Jet's dynamic pricing isn't going anywhere. In fact, you should expect Walmart.com to adopt it at some point in the future.

Full disclosure: I work at Jet on the pricing team.

Good to know, thanks!

And a "solution" to that can be to give discounts when multiple things are bought together.

That re-aligns the incentives of both parties.

Yeah it becomes about the averages for the retailer, rather than building in the actual costs for any one order.

A company I worked for actually sort of made up their shipping prices whole cloth. They had contracts with the shipping companies to get a good deal on shipping, and rarely passed those savings on. So most cases, they charged more than they were paying to ship your product, and in a few cases they charged less. So, the majority were subsidizing shipping costs for a few, with a hefty profit bump for the company. But I don't think they had any real competition, so I guess they could just charge whatever they thought people would pay. They even operated multiple brands for the same exact products/services, just to offer different prices and advertise from a different angle.

So, back to the point, regardless of whether the price is broken out or bundled, there's really no way to tell how badly you're being gouged. Unless you can find it cheaper someplace else, the only question is whether it is worth it to you at that price.

> They had contracts with the shipping companies to get a good deal on shipping, and rarely passed those savings on. So most cases, they charged more than they were paying to ship your product, and in a few cases they charged less.

I'd wager this is true of 85% of companies when it comes to cost savings.

In Australia it is pretty easy to get a feel for what low volume retailers are paying, eBay sellers will usually charge about $7 for an auspost parcel under 500g. A little above the rate for sending to the same capital city or other major cities, below the rate of seinding the most other places.

So a retailer with a bulk discount can probably get away with that rate, much higher than around $8 though and people would know it isn't a real rate.

If I recall this is largely why eBay started charging the seller fees on the shipping cost (boy was that a loophole) and then heavily pushed sellers to move to free shipping.

On the flip side, as an eBay seller it's kind of painful to know that if I sell something for $X, shipping is eating $3+ of that - on top of the 10% cut for eBay and the 2% for PayPal. It makes it not worthwhile to me to list anything below $10.

Yeah and you are subsidizing places that cost more to ship to, and depending on the average basket size of the shop you are likely paying for shipping for each item individually. Often shipping rates include a flat per package fee with a smaller weight component, so a real rate for multiple items would be much cheaper than the combined built in.

Still as a psychological thing I think customers just prefer to see free and don't think too much about how it could be costing them more. Most of our shipping is free because it seems to give better results, even if the customer ends up paying more in some cases.

Discounting built into larger orders is one way to work around this.

Rather than the negative incentive of stacking on fees at the end, stack on discounts. Repeat customers may find this attractive.

Apparently a thing: https://news.ycombinator.com/item?id=12859942

The problem is, in some states, you HAVE to show separate shipping and sales tax, otherwise you are not allowed to deduct them from your taxes. Found that out after doing a Kickstarter (can't charge shipping + tax), and California's tax board came a knockin'. It's idiotic.

Can you not show the final price to the consumer, then itemize it out on the final bill or receipt?

Absolutely. Whenever a user sees "$XX", it's a hurdle they have to psych themselves into jumping over. Why on earth would you want to make a user jump over more than one hurdle by including "$XX" for the product and then "$XX" for the shipping?

The obvious counterargument to this is, "If you get the user far enough down the purchase funnel and then show them that second hurdle of another fee or explicit shipping cost, they will have already invested enough time and effort into the purchase process that they will then justify that extra cost just before purchasing." This may well be true sometimes, and people will often pay for shipping if you itemize it out of the total price, but I think everyone would agree that this sort of nickel-and-diming practice pisses people off. Pissing people off hurts your brand. It just does.

Businesses often think too short-term when it comes to getting someone to purchase a product online. Yes, they may purchase that first time and pay "extra" for shipping. But do you think they'll come back a second time if they know they're just gonna get pissed off about that darn shipping price again? I'd say they're much less likely to.

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