What is a Surcharge?
A surcharge is an extra charge added to the price of the product or shipment. A buyer is responsible for paying the mentioned fees, and the seller usually adds it based on the requirement of additional services for delivery. A surcharge can be a tax, a shipping cost, or more. Similarly, surcharges can be levied on buyers by a shipping company.
Significance of Surcharge in an E-commerce Shipping and Delivery
Surcharges allow a brand to transfer the burden of unforeseen expenses to the end user and reduce business expenses.
- Cost transfer and profit margin: A surcharge can be used by a service provider or a seller to pass on some costs to the buyer. The most common surcharge is the delivery fee that every seller adds as an additional cost to the product’s price. Therefore, it allows a seller to maintain profit margins.
- Reducing business expenses: Transferring additional costs to customers helps businesses to lower their operating costs.
Prerequisites of Surcharge and How It Works
Several surcharges include fuel surcharges, holiday surcharges, next-day delivery surcharges, and more. Each mentioned surcharge is invoked by specific requirements, varying with each shipping company. Some of the most common surcharges are given below.
- Same-day delivery surcharge: This feature requires expedited shipping, and when a customer opts for this feature, the cost is levied on the product price as a surcharge.
- Oversize surcharge: When the volume of a product exceeds the determined size threshold, a surcharge is enforced.
Use Case with Surcharge
A Filipino buyer opts for a two-day delivery for a pair of jeans priced at ₱650. However, a shipping surcharge of ₱200 was added. Customers who purchase the jeans are required to pay the additional charges.