Shipping and Handling: What It Covers and How to Cut It

Shipping and handling is the total charge a seller adds to an order to cover getting it to you. Shipping is what the carrier charges to move the package, and handling is the seller’s own cost of preparing it: picking the item, packing materials, labels and the labor to pack and hand it to the carrier.

Most stores show the two as a single “shipping and handling” line, and some build them into the product price and advertise free shipping instead. Whichever way it’s shown, the seller is covering the same two costs. This guide explains what each part includes, how the shipping part is calculated, the rules that apply, and how sellers can bring both down.

What Does Shipping and Handling Mean?

Shipping and handling, often shortened to S&H, means every cost of fulfilling an order after the sale. Some sellers charge the two separately, but most combine them.

For a buyer, shipping and handling is simply part of the order total. For a seller, it’s a cost to recover: set it too low and each order loses money, set it too high and shoppers abandon their carts.

What Is the Difference Between Shipping and Handling?

Shipping is paid to the carrier; handling stays with the seller to cover its own work and materials.

Don’t confuse a seller’s handling charge with a carrier’s “Additional Handling” surcharge. UPS adds Additional Handling to packages that need extra care in its network, such as boxes over 50 lbs, with a longest side over 48 inches, or larger than 10,368 cubic inches, among other triggers. That surcharge is part of the shipping cost, not the seller’s handling.

How Is the Shipping Part Calculated?

Carriers price each package from a few inputs, and knowing them is the fastest way to predict the shipping part of shipping and handling.

• Billable weight. Carriers charge the greater of actual weight and dimensional weight. UPS applies dimensional weight to every package, dividing length × width × height by 139 on Daily Rates and 166 on Retail Rates. USPS applies it to packages larger than 1 cubic foot (1,728 cubic inches), dividing by 139 since July 12, 2026.
• Zone. The distance between the origin and destination ZIP codes sets the zone; farther zones cost more.
• Service level. Ground costs least, then two- and three-day, then overnight.
• Surcharges. Fuel, residential delivery (UPS charges it; USPS doesn’t), delivery area and Additional Handling can all apply.

Weight is the input sellers can predict best. Apparel sellers, for example, can start from typical weights for a shirt, a sweater or a pair of sweatpants and add the packaging. For bulky items, our guide to shipping large boxes, dimensional weight and surcharges shows where big boxes get expensive.

How Do Sellers Set Shipping and Handling Charges?

Most online sellers use one of four approaches:

Delivery to a home often costs more than delivery to a business with UPS, so it’s worth knowing what counts as a commercial address when you set rates for business customers.

What Rules Apply to Shipping and Handling?

In the U.S., the Federal Trade Commission’s Mail, Internet, or Telephone Order Merchandise Rule governs how fast sellers ship, not what they charge. If a seller states a shipping time, it must have a reasonable basis for meeting it. If it states none, it must expect to ship within 30 days of a properly completed order.

If a seller can’t ship on time, it must offer the buyer the choice of agreeing to the delay or cancelling for a refund. When an order is cancelled, the seller must refund the full amount paid, including shipping and handling, generally within seven working days.

Sales tax is a separate question. Whether shipping and handling charges are taxable depends on the state, and some states treat shipping and handling differently, so sellers should check their state revenue department’s rules.

How Can You Reduce Shipping and Handling Costs?

1. Right-size every box. A smaller box lowers dimensional weight and can avoid Additional Handling.
2. Use free carrier supplies. USPS provides Priority Mail and Priority Mail Express boxes and envelopes free of charge, which cuts the handling side.
3. Buy discounted labels. Counter prices at the Post Office or UPS Store are the highest you can pay.
4. Compare carriers per package. The cheapest carrier changes with weight, size and destination.
5. Schedule pickups. USPS pickups are free, which saves the trip and the time that counts as handling.
6. Move heavy orders to freight. Palletized shipments often cost less as LTL freight than as several heavy parcels.

ParcelPath is free, with no subscription, per-label fee or minimums, and offers up to 89% off USPS and up to 85% off UPS, plus free USPS pickups. You can compare live rates for your package in the ParcelPath rate calculator, and get an LTL quote for pallets through PalletPath in the freight quote tool. Our USPS shipping guide covers services and tracking, and our roundup of the best shipping services and solutions compares other options.

Frequently Asked Questions

What is included in shipping and handling?

Shipping and handling includes the carrier’s charge to deliver the package and the seller’s cost of preparing it. The shipping part depends on weight, size, distance and speed. The handling part covers picking the item, boxes, packing materials, labels and labor. Sellers usually combine both into one shipping and handling line at checkout.

Is shipping and handling refundable?

It depends on why the order is refunded. Under the FTC’s Mail, Internet, or Telephone Order Merchandise Rule, if an order is cancelled because the seller can’t ship it, the seller must refund the full amount, including shipping and handling. For ordinary returns, the store’s own return policy decides whether shipping and handling comes back.

Why is shipping and handling so expensive?

Usually because of the package, not the seller. Large, light boxes bill by dimensional weight, long distances fall in higher zones, and fuel, residential and Additional Handling surcharges add up. Handling adds packing materials and labor. Right-sizing boxes and comparing discounted USPS and UPS labels are the quickest ways to lower it.

Who pays shipping and handling?

The seller always pays the carrier for the label, and then decides how much of that cost, plus its handling cost, to pass on. Some charge the buyer a separate shipping and handling line, some charge a flat rate, and some build it into the product price and advertise free shipping. Either way, the order price has to cover it.

Sources

• FTC: Business Guide to the Mail, Internet, or Telephone Order Merchandise Rule
• USPS: Ground Advantage (dimensional weight)
• USPS Domestic Mail Manual 101: Physical Standards
• UPS: Shipping Dimensions and Weight
• UPS Rate and Service Guide, Daily Rates (Additional Handling)