The two senses work differently. When a store charges flat-rate shipping, the buyer pays one fee and the store still pays the carrier's actual rate for each package, so the store gains on some orders and loses on others. When a shipper uses a carrier's flat-rate service, the carrier's own price is flat, as long as the package fits the carrier's box and weight limit. In fulfillment and freight, "flat rate" also describes one fixed price for a whole job, such as an order or a load, covered below.
Carrier Flat-Rate Services
Fig. 1 · Comparison
| Item | USPS Priority Mail Flat Rate | UPS Simple Rate | FedEx One Rate | A store's flat shipping fee |
|---|---|---|---|---|
| What sets the price | The Flat Rate envelope or box; the same price to any state | Packaging and speed, not weight or distance; separate prices to or from Alaska and Hawaii | Packaging size, destination and delivery speed | The store's own rule: one fee per order, or per band of order values |
| Weight limit | Up to 70 lb | Over 50 lb ships at standard UPS rates | Envelopes under 10 lb; boxes, paks and tubes under 50 lb | Whatever limits the store sets; it pays each package's real label cost |
| Packaging | USPS Flat Rate envelopes and boxes | Any box up to 1,728 cubic inches | Packaging eligible for FedEx One Rate | Any |
USPS Priority Mail Flat Rate, UPS Simple Rate and FedEx One Rate each set their own rules for what keeps the price flat. Outside those rules the price is no longer flat: a UPS Simple Rate package over 50 lb, for example, goes at standard UPS rates, based on dimensional weight and zone, and Priority Mail outside Flat Rate packaging is priced by weight and zone.
Flat-rate service tends to pay off for small, heavy items going a long way, where a price by weight and shipping zone would be high. For light items or short distances, the carrier's regular rate can cost less, so compare both for the package in hand. Carriers change their prices, so check the current price list rather than an old quote.
Flat-Rate Shipping Charges for Online Stores
A store that offers flat-rate shipping charges the same fee on every order, or on every order in a band of order values, whatever it weighs and wherever it goes. Buyers see the shipping cost before checkout, and the store's checkout does not need live carrier rates.
The store still pays each package's real label cost, which depends on its billable weight (actual or dimensional weight), zone and service. So the flat fee averages out: some orders cost less to ship than the fee, and some cost more.
Example (hypothetical label costs): a store charges a flat $8. A light order to a nearby zone costs it $5 to ship, so it keeps $3. A heavy order across the country costs $14, so the store pays $6 of the label itself. Each heavy order wipes out the gain on two light ones, so the fee covers shipping on average only if at least two of every three orders look like the first.
How to Set a Flat Shipping Rate
- Pull your label costs. Take a few months of actual shipping costs per order from your shipping software or your 3PL's invoices.
- Find the average, and the spread. The average label cost per order is the starting point; look at heavy and far-zone orders separately, because they are where a flat fee loses money.
- Decide how much to recover. Charge the average to break even on shipping, or less and fold the rest into product prices.
- Set limits. Exclude or surcharge oversized items, use tiers by order value, or charge a different flat rate for distant regions.
- Review it. Recheck the fee when carrier rates change or when your product mix changes.
Lowering the cost behind the fee helps too: right-sized packaging cuts dimensional weight, and rate shopping picks the cheapest service that meets the delivery promise on each order.
Flat-Rate vs. Calculated Shipping
- Flat rate is simple for buyers and easy to show on product pages, but it overcharges light, nearby orders and undercharges heavy, distant ones.
- Calculated shipping charges each order the carrier's rate for its weight, size, destination and speed. It matches cost to price, but the buyer often sees the shipping cost only at checkout, and checkout needs live rates.
Stores with products of similar size and weight fit a flat rate well; stores selling everything from small parts to bulky items are better served by calculated rates or several flat tiers.
Flat-Fee Fulfillment and Flat-Rate Freight
Some 3PLs offer flat-fee fulfillment: one price per order that bundles picking, packing and sometimes shipping, instead of separate fees for each. It makes the cost per order predictable, but it can cost more for small, light orders than itemized fees would. Our guide to 3PL pricing compares the main 3PL pricing models.
In trucking, a flat rate is one price for a load or a lane, rather than a per-mile rate. It appears on the rate confirmation as the linehaul rate.