What you charge for delivery affects conversion more than almost any other number on the page, and most small businesses set it by guessing.
Know what it actually costs you
Carrier rate, packaging materials, and the labour to pack. That last one is real and almost always omitted — if packing a parcel takes ten minutes, that is ten minutes of somebody's paid time on every order.
Work out the true cost for your three or four most common consignment shapes. Everything below depends on knowing it.
The four approaches
Charge actual cost. Honest and easy to justify, and it makes checkout arithmetic unpredictable for the customer, which costs sales.
Flat rate. Simple, predictable, easy to advertise. You lose on distant or heavy orders and gain on near ones, so it only works if you know your mix.
Free over a threshold. The most effective at raising average order value, provided the threshold is set above your current average and the margin at that level actually covers the delivery.
Built into the price. "Free delivery" with the cost absorbed into the product. Works well where your competitors charge separately, and badly where customers compare unit prices closely.
Show it early
The single most common cause of abandoned carts is a delivery charge appearing at the final step. It is not the amount that does the damage — it is the surprise.
Put the cost, or the rule, where a customer sees it before they have committed attention to the purchase.
Be honest about time
Under-promise. A business that says three to five days and delivers in three is doing well; one that says next day and takes three has failed twice — once on the delivery and once on the promise.
Say when you dispatch, not only when you deliver, and say what happens if you miss it.
Handle the outliers deliberately
Remote areas and oversized items cost dramatically more, and a flat rate that works nationally is usually being subsidised by somebody. Either exclude them clearly, quote them separately, or accept the cost knowingly.
What you should not do is discover it order by order and absorb it silently.
Review it with the rates
Carrier rates change annually and delivery charges frequently do not, which quietly turns a break-even into a loss. Diarise the review with your other annual pricing decisions.
General guidance on commercial practice, not financial advice.