Are You Falling For These Flat Rate Fallacies?

If shipping costs are a challenge for your business, you are definitely not alone. To help make sure you don’t leave any money on the table, we’re taking a closer look at potential cost-saving opportunities.

First up? The Flat Rate Fallacy. 

While USPS Priority Mail Flat Rate and Regional Rate are great values in many instances, some merchants are choosing to use them even when they’re more expensive than shipping with their own box via USPS Priority Mail Cubic.

In 2020, shippers could have potentially saved almost $1.5M if they didn’t use Flat and Regional Rate Boxes in cases where using their own packaging would have been more cost-effective.

Why Do So Many Shippers Use USPS Priority Mail Flat Rate and Regional Rate?

There are many advantages to shipping via USPS Priority Mail Flat Rate and Regional Rate.

USPS Priority Mail Cubic, USPS Priority Mail Flat Rate, and USPS Priority Mail Regional Rate use the same delivery infrastructure—so they essentially offer the same service, including tracking, insurance, and a 1-3 business day delivery window—but they are priced differently. 

• Priority Mail Flat Rate charges a set fee for packages up to 70 pounds; if it fits, it ships.
• Priority Mail Regional Rate charges a flat fee for packages up to 15 and 20 pounds, with rates based on the distance traveled.  
• Priority Mail Cubic rates are based on the size of the package up to 20 pounds. 
• Priority Mail (weight-based) rates are calculated based on package size, weight, and distance traveled. 

For more details about each of these service levels, visit our USPS Priority Mail overview page. 

Generally speaking, Priority Mail Flat Rate is a great option when you have heavier items and/or items that need to travel further across the country. Since the shipping cost is fixed regardless of weight or distance traveled, merchants tend to use Priority Mail Flat Rate because:

• They won’t need to weigh their packages. 
• It’s easier for them to plan and budget with better accuracy and predictability. 
• USPS provides free packaging, so merchants don’t need to buy boxes or envelopes.

USPS Priority Mail Regional Rate has similar benefits, except its “sweet spot” is for medium-weight packages traveling shorter distances. 

At this point you’re probably thinking, why wouldn’t I always use Priority Mail Flat Rate or Regional Rate Box? I can ship anywhere in the U.S. at a fixed cost, so that has to be the best option, right? Well, you’re not completely wrong.

But what if I told you…

You could be overspending on shipping if you’re only using Priority Mail Flat Rate or Regional Rate.

So Priority Mail Flat Rate or Regional Rate Isn’t Always The Best Choice?

The short answer is no; using flat rate shipping isn’t always the most cost-effective strategy.

According to our data, if merchants did overpay, they could have saved an average of $2-3 if they had used their own packaging.

To paint a clearer picture, let’s jump into an example.

Let’s say we’re using a USPS Medium Flat Rate Box (11 1/4″ x 8 3/4″ x 6″) to ship a 2 lb. item. It would cost us $13.75 to ship anywhere in the U.S. using Priority Mail Flat Rate.

If we used our own box with the exact dimensions (11 1/4″ x 8 3/4″ x 6″) to ship the same 2 lb. item, it would only cost us somewhere between $7.79 – $11.69 using Priority Mail, depending on the distance traveled. We could potentially save nearly $6 on a single package!

Falling Flat With Flat Rates

If you’ve overpaid for shipping by using Priority Mail Flat Rate or Regional Rate Boxes when they’re not the cheapest option, you’re not alone.

The most common misuses of Flat Rate services are Medium and Large Flat Rate Boxes. While these two services only account for 36 percent of all overpaid labels, they combined for 87 percent of the total overspend. That’s nearly $1.3 million dollars!

Here’s a breakdown of what each service level represents in total dollars overspent.

State of Shipping

Want more information about what other businesses spend on shipping? Click here to access our 2020 State of Shipping Report and see how you compare on shipping spend, carrier usage and so much more.

How To Find The Best Rate

Step 1: Compare Costs 

The very first step to finding the best rate is determining whether you should use Priority Mail Flat Rate or Regional Rate and the carrier-provided packaging, or Priority Mail Cubic and your own packaging.

The following charts detail which service level is the cheapest option and how much you’ll pay. Find the Priority Mail Flat Rate or Regional Rate Box you use, your zone, and the weight of your item(s). The price you pay for each designated service level is listed in the associated cell. 

Flat Rate Boxes

*The Large Flat Rate box dimensions (12 ¼” x 12 ¼” x 6”) are too big for Priority Mail Cubic, but if you’re able to use your own packaging with at least one side that’s about a quarter-inch smaller, you can qualify for Cubic and save some serious cash.

Flat Rate Regional Boxes

Step 2: Determine Box and Supplies Cost 

Before you change your entire shipping process, make sure the additional fees of purchasing boxes and any other shipping supplies do not offset the potential savings. If so, then you may want to stick with using the Priority Mail Flat Rate or Regional Rate Box. 

Putting the Tables to Use: An Example

If you remember our example from above, it would cost us $13.75 to ship a 2 lb. item in a Medium Flat Rate Box (11 1/4″ x 8 3/4″ x 6″), anywhere in the U.S. using Priority Mail Flat Rate.

Assuming that all variables (including package dimensions, weight, and destination) stay the same, the chart below represents when you should use Priority Mail and when you should use Priority Mail Flat Rate.

Cross-sections with a rate below $13.75 are scenarios where using Priority Mail and your own packaging are cheaper. Cross-sections with a rate of exactly $13.75 are scenarios where using Priority Mail Flat Rate and carrier-provided packaging are cheaper.

If we look at the rates highlighted in green for our 2 lb. package, we can see that it’s almost always cheaper to ship using Priority Mail. The only exception is Zone 9, in which case Priority Mail Flat Rate is cheaper.

Similarly, if we have a 10 lb. item, we can see that using Priority Mail and our own packaging is cheaper for Zones 1-6, but using Priority Mail Flat Rate is cheaper for Zones 7-9.

Any questions? Feel free to send an email to support@goshippo.com or sign in to your Shippo account to access live chat support during business hours.

About the Analysis 

These findings are based on an analysis of the following labels purchased in 2020: 

• USPS Priority Mail Flat Rate 
  • Small Box
  • Medium Box
  • Large Box
• USPS Priority Mail Regional Rate
  • Box A
  • Box B

Note: This data does not include any of the USPS Priority Mail Flat Rate Envelopes purchased, because they are great, cost-effective options almost all of the time.