What is billable weight?
Billable weight is exactly what it sounds like—the weight you’ll be charged to ship a parcel. Shipping carriers like FedEx and UPS use the greater of the actual weight and dimensional weight of your package as the billable weight to calculate its shipping charges.
Based on this pricing approach, the billable weight of a lightweight product in a large package is its dimensional weight, and the billable weight of a heavy product in a small package is its actual weight.
Since carriers have limited physical space and weight capacity on their truck, this approach helps them charge shippers for their package’s actual weight and for the space it takes up on their truck.
In this post, we’ll take a closer look at what billable weight is and explain how to accurately calculate billable weight, as it greatly affects your shipping costs
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How does billable weight differ from actual weight pricing?
Actual weight is the physical weight of the parcel including its packaging, measured in pounds or kilograms using a postage scale. On the other hand, the dimensional weight of a package is calculated by multiplying the dimensions (length, width and height) of a package and dividing the product by the shipping carrier’s DIM divisor.
For domestic and international shipping, carriers compare the actual weight of a package with its dimensional weight. The higher value among the two is the billable weight and used to calculate the total shipping rate.
For example, a small box containing heavy dumbbells may take up relatively less space and result in smaller DIM weight than the actual weight. In this case the carriers would use the actual weight of the package as the billable weight to calculate shipping costs.
How does billable weight compare to dimensional weight (DIM weight)?
Dimensional weight, or volumetric weight, is a pricing technique based on the amount of space a package occupies in relation to its actual weight.
Since it costs more to ship a bulky, lightweight package, compared to a dense, heavy item, taking into account the dimensions and weight of packages enables shipping companies to maximize their profitability.
When you account for package dimensions, you usually get a dimensional weight that is different from the actual weight of the package. The larger among the two weights is used as the billable weight of the package by carriers to determine the shipping cost.
For example, a large box filled with pillows might be lightweight. By billing based on the dimensional weight of the package, the carrier will charge for how much of the truck’s space the package occupies to maximize the shipping charges. In contrast, the carrier may struggle to turn a profit if it uses the actual weight of the package as its billable weight.
Formula to Calculate Billable Weight
Major shipping carriers such as FedEx, UPS, and USPS use the DIM weight formula, including a set number called DIM factor (also called DIM divisor), to calculate the package’s dimensional weight.
Before determining the billable weight of a package, you need to first measure its actual and dimensional weights.
- Start by determining the actual weight of the package using a postage scale, and round off the measurement to the next whole pound.
- Next, measure the package’s length, width, and height in inches and round any fraction to the nearest whole number. Find the cubic size of the package by multiplying the dimensions of the package, then divide this number by the carrier’s DIM divisor to get the DIM weight of the package.
After you’ve measured the actual weight and DIM weight of your package, determine the billable weight using the following rules:
Billable weight of a package = DIM weight, if the DIM weight is greater than the actual weight.
Billable weight of a package = actual weight, if the actual weight is greater than the DIM weight.
NOTE: DIM weight only applies to packages that have a cubic size greater than 1 cubic foot (1,728) in volume. For packages 1 cubic foot in size or smaller, the actual weight of the package is used as its billable weight.
Do you want to determine the billable weight of a shipment? Use our dimensional weight calculator to compare the actual and dimensional weights between FedEx, UPS, and USPS. As a bonus, you can automatically calculate the shipping cost per package.
Billable Weight with UPS
Suppose you send a package that is 14” x 14” x 14”, and it weighs 22 pounds. UPS has a standard DIM factor of 166 for retail rates and 139 for daily rates.
Let’s calculate the DIM weight of the package and then compare it with the actual weight to determine the billable weight for UPS:
DIM weight = (length x width x height) / DIM factor
= 14” x 14” x 14” / 166
= 2,744 cubic inches / 166
DIM weight = 16.53 lbs
The actual weight of the package is 5.47 lbs larger than its DIM weight; it will be used as the billable weight.
Billable Weight with FedEx
Let’s say you send a package that is 13” x 15” x 14”, and weighs 16 pounds. The FedEx DIM divisor is 139.
To determine the billable weight, we’ll first calculate the DIM weight of the package using FedEx DIM divisor, i.e.139, and compare it with the actual weight.
DIM weight = (length x weight x height) / DIM factor
= 13” x 15” x 14” / 139
= 2,730 cubic inches / 139
DIM weight = 19.65 lbs
Because the DIM weight is 3.74 lbs lighter than the actual weight of the package, the latter will be used by FedEx as the billable weight.
How to Reduce Future Shipping Costs
The cost of shipping has increased more than 23% since 2020 and it is expected to increase by double-digits in 2022 and beyond. Therefore, it’s essential for businesses to reduce shipping costs to improve profit margins.
Here are 3 effective strategies that will keep your shipping expenses low and improve your bottom line.
1. Review your packaging options.
Try reducing the package dimensions as much as possible because shipping charges are greatly affected by the box size. For example, if an item has an actual weight of 10 pounds shipped in ¾ full carton with a dimensional weight of 14 pounds, you will be charged at the 14 pound rate.
And while you cannot reduce the actual weight of your package, you can use lightweight packaging to target lower rates and reduce your overall shipping costs. For instance, try changing the packaging type from cardboard box to a polybag, depending on the product type and padding needed for safe delivery.
Major shipping carriers like FedEx and UPS offer discounted packaging supplies like bubble wrap, padded envelopes, and poly mailers to small business owners. Consider purchasing packaging material in bulk quantities to help you control packaging-related costs.
2. Partner with a 3PL.
Package weight and size seriously impact overall shipping costs. If most of your orders come from a particular region, consider working with a 3PL company (or at a contract packager) that’s located in that region to handle your packaging, labeling and other fulfillment tasks.
3PLs tend to have the expertise and the packaging machinery needed to make your packaging processes more efficient and accurate. You’ll reduce operation expenses, storage fees, and over-distribution costs.
Additionally, 3PLs are great at fulfillment activities like packaging and deal with the challenges of packaging on a daily basis. They have the experience to identify areas that might be leaking money (such as carrier surcharges) and take measures to optimize packaging costs.
Most 3PLs handle fulfillment for hundreds of companies, helping them negotiate lower shipping rates from carriers and pass down these savings to the shipper. As a result, you’ll be able to bring down shipping costs and boost your bottom line.
3. Properly estimate your shipping costs.
Transport costs contribute to overall parcel costs, and accurately measuring your shipping costs is vital to your business’s success.
A shipping calculator is a great way to accurately calculate your shipping. Shipping calculators help you quickly compare the shipping rates of different carriers, empowering you to reduce costs where possible.
Here are a few useful shipping calculators offered by major shipping carriers:
FedEx Shipping Rate Calculator
In addition to the standard shipping rates, there are often additional costs of shipping such as product delivery speed and order tracking. Make sure to include all these shipping charges when billing your customers so you don’t have to absorb them.
Sifted Logistics Intelligence gives eCommerce businesses and shippers the tools they need to get a better handle on their shipping costs, and avoid any obvious and hidden fees.
Optimize your shipments with Sifted’s Logistics Intelligence solution
Billable weight can be confusing for shippers and eCommerce businesses alike. However, with some attention to carrier pricing models and packaging details, you can avoid unexpected shipping fees and increase profit margins.
Sifted’s software gives useful insights into cost components that affect shipping rates, enabling to you to make better business decisions and optimize shipping costs.
Ready to offer affordable shipping to your customers? Get a free demo of Sifted!
