You’ve put in the hard work to source or manufacture a product for resale. You’ve found a suitable buyer. There’s just one condition – they want you to arrange the shipping. Now you’re wondering, “How will my parcel’s weight influence the cost of shipping?”. To determine this, you will need to calculate your parcel’s billable weight.
To calculate how much it will cost to get your package from point A to B, it is important to determine:
- How much the parcel weighs (actual weight); and
- How much space the parcel physically occupies (volume or dimensional weight)?
Weight and volume both play an important role in calculating a parcel’s billable weight i.e. the weight the courier or freight company will charge to transport the parcel to the desired destination.
You will either be billed based on the dimensional weight OR the actual weight. The majority of freight and courier companies calculate both weights and then charge their clients for the largest of the two weights.
To determine your parcel’s actual weight is easy – simply weigh it on a scale. To calculate the dimensional weight, you can use the formula explained below.
How to calculate dimensional weight:
To calculate dimensional weight, you need to multiply the package’s dimensions. Here is the formula:
Length (cm) x Width (cm) x Height (cm)
For example, if you have a cuboid-shaped package with a length of 50cm, a width of 25cm, and a height of 35cm, the calculation is as follows:
Step 1: 50cm x 25cm x 35cm = 43,750
Next, you need to divide by your chosen freight company’s conversation factor. (Request the conversation factor in advance. Many companies use 5000, but some may even use one as high as 6000 or 7000):
Step 2: 43,750/5000 = 8.75kg
The logistics company will usually round the results up to the nearest half kilogram. They also weigh the parcel beforehand to determine its actual weight. They then use the heavier of the two weights to determine the final price.
Note: In most cases, if packages weigh less than 2kgs then freight companies will charge the customer one standard price.
Putting it into practice:
Now that we’ve explained the theory, here is a practical example of how to calculate the billable weight of a floor lamp.
Floor lamps are not usually very heavy, but they can be irregularly shaped.
In this example, we will use a floor lamp that is 120cm tall, 40cm in length, 35cm in breadth, and has a weight of 10kg.
Step 1: 120xm x 35cm x 40cm = 168 000
Step 2: 168 000/5000 = 33.6kg
In the above example, the floor lamp’s dimensional weight of 33.6kg is heavier than its actual weight of 10kg. This means that the logistics company will charge based on the billable weight of 34kg (rounded up to the nearest kg), instead of its actual weight of 10kg.
This useful infographic outlines the above calculation visually:
If you would like to learn more about VAT costs associated with exports, refer to our VAT & Exports: A quick guide blogpost.
