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How Much Do Shipping Systems Cost?

Posted by Greg Marone on Jun 7, 2018 8:00:00 AM

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This is a tough question. Shipping system cost depends on the functionality of the solution and its implementation. Are you interfacing it to a host system? Is it a complex integration? How much support do you have from your internal IT staff? What carriers and special services do you use?

The reason for asking this question is completely understandable, but the short answer is, "It's complicated."


Read the Guide: 9 Ways to Reduce Warehouse Management Costs


Key Factors in Shipping System Costs

  • Ease of implementation. Does your potential system have a streamlined deployment process? How much technical time is going to be put into this step?

  • Business requirements. Your common shipment types have a strong influence on the modules you need in your system. For example, if you ship a lot of hazardous material, that's a complicated and time-intensive configuration. You need a lot of documentation and possibly different hardware depending on what you have. Work with international shipments? Then a lot of extra data is needed such as package contents in order to produce the customs documentation. If you're mostly shipping domestic packages with one or two carriers, it's a pretty straightforward process. You get a less expensive system with this configuration due to fewer module licensing costs and an easier implementation.

What to Keep in Mind

What processes do you utilize for your shipping? International and paperwork-intensive procedures and complex shipping configurations contribute to a system that's more expensive than a standard package.

Does your business have a long list of rules that you need to follow with each shipment? You don't want to risk packages going out with incorrect labels, the wrong service or other problems. You can find a system that enforces rules compliance to avoid these concerns, but you will pay more for this convenience.

Do you want to interface with the host system but use a black box configuration so the users ship from the host application screens instead of the shipping program screens? This calls for a complex implementation that incurs additional costs.

Some of your shipping system expenses also come from your internal IT costs. They need to modify your host app to support custom interfaces or provide new functionality. So you don't simply pay $50,000 to a vendor for a new shipping system, you need to consider internal IT and operational costs as well. Take the time to discover the full cost of a shipping system before you make a purchase decision.

It's All About Value

Think about the points above, how many of these processes are done manually today? How much would you save in time and money every day if these processes were now part of an integrated system that automated these processes? Fewer errors, faster processing time and increased functionality are all results of implementing a shipping system.

Therefore while it is important to know how much a new shipping system would cost, it is just as important to understand the value it would bring to your organization. Cost becomes much less important when a systems value is high.

For example, if implementing a new shipping system would allow you to ship via new services which could open up your business to new customers as well as save you 10 labor hours per day while reducing your freight costs by 20 percent, price becomes much less of a concern.

The Bottom Line in Shipping System Cost

In order to evaluate how much a new shipping system would cost, you should start by understanding your current and future requirements. Never forget to include projected growth into your needs when evaluating any new business system. As well remember to include your internal IT and operational costs.

Then evaluate the new shipping system based on the value it will bring to your organization. Will it allow you to pursue new avenues of business? How much savings will you see in reduced freight? What affect will less shipping errors have on your business?

While understanding that special services, a highly integrated system and increased functionality will result in a higher system cost, it is just as important to weigh the value of these items as well in order to decide what is best for your organization.

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Topics: shipping costs, shipping system