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New UPS Flat Rate Box
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<blockquote data-quote="RustyPMcG" data-source="post: 776640" data-attributes="member: 30339"><p>Using round numbers, let's say I get 10 packages now, with a retail price of $20 each. I make $10 on each, for a total of $100.</p><p> </p><p>Now the flat rate box comes along for $12, and I'm still going to get the same margin on them, so I'll get $6 each. Let's say 4 of the original 10 shippers decide to use the lower-priced flat rate box, so now make $10*6 + $6*4, or $84. I'm now coming up $16 short. I need at least 3 new customers to break even. That's a 30% increase in the number of packages. </p><p> </p><p>That's assuming that I'll be able to handle 30% more packages without increasing my overhead, which includes employee wages. If I have to add additional help, I may need a 40% increase. </p><p> </p><p>Do you really think that the flat rate box could bring in 30% more packages? Or even 20% more?</p><p> </p><p>I'd put a more realistic figure at about 5%-8%. And at that rate, I can't afford to hire anyone new. My existing employees will just have to work harder, and customers will have to wait longer. Plus my already tight bottom line will be squeezed some more, and I may have to seriously consider becoming a vegetarian.</p><p> </p><p>Now here's where it gets even worse: With a flat rate box there's no measuring and no weighing. That takes out another hurdle that keeps people from doing their own shipping online. That means not only will some of those full-price customers convert to flat rate boxes. They'll pay for them online, and all I'll get is $1 per package for their drop-offs. </p><p> </p><p>So let's say we go from 10 full-price packages, to 6 full-price packages, and 5 flat rate boxes, 3 of which are drop-offs. That's $60+$12+$3. That's gross revenues of $75 instead of the $100 I was making before the flat rate boxes. UPS may now have 11 packages instead of 10, but I have 25% less gross revenue, and my profit margin (what's left after overhead) drops below zero. At that point I'd be better off shutting-down my shipping operations, and put all my effort into printing. I could then lay-off most of my staff, those folks with flat rate boxes can chase you guys down the street to take their boxes, and those 6 folks who were shipping at full price can go to the FedEx-Office store where the store manager doesn't depend on his particular store turning a profit in order to take home his company paycheck.</p><p> </p><p>There's more to success than a small increase in package volume.</p></blockquote><p></p>
[QUOTE="RustyPMcG, post: 776640, member: 30339"] Using round numbers, let's say I get 10 packages now, with a retail price of $20 each. I make $10 on each, for a total of $100. Now the flat rate box comes along for $12, and I'm still going to get the same margin on them, so I'll get $6 each. Let's say 4 of the original 10 shippers decide to use the lower-priced flat rate box, so now make $10*6 + $6*4, or $84. I'm now coming up $16 short. I need at least 3 new customers to break even. That's a 30% increase in the number of packages. That's assuming that I'll be able to handle 30% more packages without increasing my overhead, which includes employee wages. If I have to add additional help, I may need a 40% increase. Do you really think that the flat rate box could bring in 30% more packages? Or even 20% more? I'd put a more realistic figure at about 5%-8%. And at that rate, I can't afford to hire anyone new. My existing employees will just have to work harder, and customers will have to wait longer. Plus my already tight bottom line will be squeezed some more, and I may have to seriously consider becoming a vegetarian. Now here's where it gets even worse: With a flat rate box there's no measuring and no weighing. That takes out another hurdle that keeps people from doing their own shipping online. That means not only will some of those full-price customers convert to flat rate boxes. They'll pay for them online, and all I'll get is $1 per package for their drop-offs. So let's say we go from 10 full-price packages, to 6 full-price packages, and 5 flat rate boxes, 3 of which are drop-offs. That's $60+$12+$3. That's gross revenues of $75 instead of the $100 I was making before the flat rate boxes. UPS may now have 11 packages instead of 10, but I have 25% less gross revenue, and my profit margin (what's left after overhead) drops below zero. At that point I'd be better off shutting-down my shipping operations, and put all my effort into printing. I could then lay-off most of my staff, those folks with flat rate boxes can chase you guys down the street to take their boxes, and those 6 folks who were shipping at full price can go to the FedEx-Office store where the store manager doesn't depend on his particular store turning a profit in order to take home his company paycheck. There's more to success than a small increase in package volume. [/QUOTE]
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