Flat rate is a logistics strategy commonly accepted by e-commerce sellers because it is very simple and charges one price regardless of shipping weight. Despite the popularity of flat rates there are drawbacks because it tends to cause logistics costs to exceed expectations. In some cases, flat rates are the most cost effective option, but not always.
Many logistics companies offer flat rate shipping services, but we'll focus on the break-even point for USPS flat rates.
What are the USPS zones?
Before delving into the break-even point analysis, it is necessary to understand the USPS zones.
The following USPS postage rates are calculated based on the weight of the mail/parcel and the distance to be shipped.
USPS calculates the distance between the original ZIP code and the destination ZIP code based on a map of regions. There are nine USPS zones, with zones 1-8 covering the continental United States, Alaska, Hawaii, and the U.S. territories of Puerto Rico and the Virgin Islands. Region 9 ZIP codes include U.S. territories, the Commonwealth, and freely associated countries located primarily in the Pacific Ocean, such as Guam, the Northern Mariana Islands, and the Republic of the Marshall Islands.
Region 1 contains the ZIP code closest to the original ZIP code. The larger the area code, the further away the destination ZIP code is - thus, the Region 9 ZIP code is the farthest away from the original ZIP code.
The following is an example based on the Los Angeles postal area map.
As shown in the map above, the area near Los Angeles is purple (Zone 1). All of the eastern United States, most of Alaska, and Hawaii are orange, or Zone 8, which indicates that they are the farthest from Los Angeles.
USPS zones are dynamic, which means they will change based on the location of the package destination. For example, Zone 1 of the Miami ZIP code is not the same as Zone 1 of the Los Angeles ZIP code. If you want to know which zone to ship your product to, you can enter the origin and destination zip codes when you access USPS's domestic zone map.
USPS Priority Mail and USPS Small Flat Rate Box
Let's start our break-even analysis with the retail postage rate schedule for Priority Mail and compare it to the Small Flat Rate Box priced at $7.90, measuring 8 11/16" x 5 7/16" x 1 3/4".
2019 USPS Priority Mail Price List
Note that the first column is the weight of the shipment, not the exact weight in pounds. If your package weighs exactly 1 pound (1 lb 0 oz), it will cost $7.35 to ship to Zones 1 and 2. However, if your package weighs 1 pound 1 ounce, this means the shipment is over 1 pound and will cost $7.85 to ship to zones 1 and 2.
When do I use the flat rate for small shipments?
According to the chart, if the shipment weighs 2 pounds 1 ounce or more, it will cost at least $8.30 to ship to Zones 1 and 2 at the Priority Mail rate. Since the small flat rate is $7.90, it is more appropriate to choose the small flat rate for shipments less than 2 pounds to zones 1 and 2.
And it is more economical to choose the small flat rate for shipments less than 2 pounds, as shown in the following table.
USPS Small Item Rates for shipments under 2 pounds
USPS Priority Mail and USPS Medium Flat Rate Box
USPS Medium shipments cost $14.35 and have an outside dimension of 14 * 12 * 3½. If the shipment weighs less than 2 pounds, the USPS Priority Mail rate will be cheaper than the Medium Flat Rate Box.
However, if shipping 1lb to 2lb shipments to Zone 9, it is best to use the medium shipment flat rate.
When is it appropriate to use the medium shipment flat rate?
According to the chart, if a shipment weighs 11 pounds or more, Priority Mail shipments to Zones 1 and 2 cost at least $15.20. Since the medium flat rate box rate is $14.35, it is appropriate to choose the medium flat rate for shipments over 11 pounds to Zones 1 and 2.
It is more economical to use the medium flat rate for shipments less than 11 pounds, as shown in the following table.
USPS Medium rates are appropriate for shipments under 11 pounds
USPS Priority Mail and USPS Large Flat Rate Box
USPS Large Rate Boxes cost $19.95 for shipments with an outside dimension of 12¼*12¼* 6.
When is the Large Flat Rate appropriate?
According to the price list, Priority Mail shipping to Zones 1 and 2 costs at least $20.05 if the shipment is over 18 pounds, and the Large Flat Rate is $19.95, so the Large Flat Rate is the most appropriate option when shipping to Zones 1 and 2 for shipments over 18 pounds.