What is Dimensional Pricing?
by Jillian Voege
This is a question that we run into with a lot of young businesses, so here's an in-depth explanation of dimensional weight and its implications to shipping rates.
Dimensional pricing (or dimensional weight) is a pricing technique for carriers to better reflect the cost of carrying bigger packages, regardless of their weight. Traditionally, carriers have used weight as the major determinant in rates. But by charging only by weight, carriers lose money when carrying bulky and lightweight packages that take up valuable space. Space can be just as important to a carrier as weight, since bulky packages limit the amount of total packages the carrier's vehicle can carry.
Calculating dimensional pricing is different for each carrier, but most of them follow a basic formula:
Once dimensional pricing is calculated, the rate can then be applied. Between the dimensional price and the normal weighted rate, carriers will usually apply the higher one of the two. After all, they're businesses that prioritize revenue as well.
So what does this mean for your business?
First, you should know exactly how your carrier will calculate dimensional pricing. Most of them may follow the same formula, but some of them also use different dimensional factors, while others apply the rates in different ways. Once you have a good handle on the carrier's dimensional pricing and the rates associated with it, you can then make strategic decisions on how to package your shipments. For instance, breaking down a product to enable smaller packaging could possibly result in lower overall rates.
And as we tell any young business, if you're growing quickly, it's best to renegotiate the contracts you have with your carriers. Dimensional weight - like almost any other rate - is subject to negotiation based on the volume you push through the carrier.