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Why are single Dymo labels so much more expensive? The myth of free shipping!

Thursday, 11 April 2013  |  Admin

You may have noticed that the price of single LabelWriter and Dymo D1 labels have increased quite a lot recently.  The reason for this is the cost of sending out small packages via Royal Mail, who have recently raised their prices and also the way bulkier items are charged.

While you may think that sending out a single box of labels probably costs a first class stamp that is far from reality.  A while back Royal Mail started charging based on the thickness of the package rather than the weight - so even a fairly light package will be charged more simply because it's bulky.  Combine that with the recent increase in their mailing costs and it now costs £5.20 to send a single 99012 label by 2nd class post!  And that's just the cost of the stamps.

So because we offer free posting that means if you buy a single 99012 label the cost of the label has to incorporate the delivery cost of £5.20, so the cost of single labels has increased.  So why do we offer free postage then?  Well that's an interesting question...

Firstly, because all of our main competitors do it, so if we don't we'll lose business to them even though we might be cheaper overall (counter-intuitive, but see below).  Secondly, because customers demand it - even though it doesn't make sense.

And this is the interesting bit - study after study has shown that all other things being equal, customers will buy from suppliers that offer free delivery even if the product is more expensive.  So for example, if Company A sells an item for £20 plus £5 delivery, and company B sells the identical product with identical delivery - but charges £25 for the product with "free" delivery - then customers will choose company B, because they just love the idea of free delivery (or hate the idea of paying for delivery).  But either way they pay exactly the same, but they choose the free delivery in droves. So that's just weird.

Now if  you're just buying a single item then it doesn't make any difference whether you choose 20+5 or 25+0, you still pay the same and the merchant still gets the same - so weird or not, who cares.  The problem (for you anyway) comes when you buy more than 1 of the item.  Let's look at that again assuming you buy 2 items - £20+£20+£5 delivery = £45 or £25+£25+£0 delivery = £50.  So now your "free" delivery has cost you an extra £5 over using paid delivery from company A.  Buy 3 items, that's an extra tenner, and so on.

The moral of the story is that there's no such thing as a free delivery!  The merchant has to pay the (increasingly expensive) delivery charge, so obviously they will build the cost in to their products.  Now some merchants will spread it around but apply a minimum order value (ie. "free delivery on orders over £50") which means the delivery charge isn't all lumped on to one product, but it does mean that you can't just place small orders - no good if you just want a single box of labels.  We prefer a different approach - we'll build the delivery charge into single items, so if you buy a single label it includes the full delivery charge, but we then apply quantity discounts which rapidly brings the unit price down and means that if you buy 10 boxes of labels you don't end up paying 10 hidden delivery charges!

Anyway, I hope that explains why the costs of single labels have shot up - blame Royal Mail!

(Update:  We have now chosen to charge delivery on all orders at cost, which means we can charge a much lower price for the labels whether you buy 1 or 100)

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