What Should Shipping Cost as a Percentage of Your Order Value?

Sellers ask “is ₹95 a good rate?” The rate is meaningless on its own. What matters is shipping as a share of the order it is carrying.

The working benchmark

Average order value	Healthy all-in shipping share
Under ₹500	12–18%
₹500 – ₹1,500	8–12%
₹1,500 – ₹5,000	4–8%
Above ₹5,000	Under 5%

All-in means freight plus COD fee plus GST plus the RTO cost spread over delivered orders. If you are measuring freight alone, you are not measuring the thing that hits your P&L.

If you are above the band

The order of attack, by how much it usually returns:

1. RTO rate. Almost always the biggest number and the one most people overlook, because it does not appear on a shipping invoice as “RTO” — it appears as two freight legs and a lost sale. Moving from 25% to 15% typically beats any rate negotiation available to you.

2. Volumetric weight. Measure your five highest-volume SKUs packed. If any is being billed above its actual weight, a smaller box is a permanent rate cut with no negotiation required.

3. Slab boundaries. A 520 g parcel on a 500 g slab card is paying for a full extra step. Twenty grams of packaging is sometimes worth ₹38 a parcel.

4. Carrier mix. The cheapest carrier on a lane is rarely the cheapest on all of them. Per-lane allocation beats a single national default.

5. The rate card itself. Last, because it is the hardest to move and the least likely to be your actual problem.

If you are below the band

Check you are not buying it with delivery failures. A very low shipping cost alongside a rising RTO rate or slipping delivery SLA is not a saving — it is a cost that has moved somewhere you are not measuring.

Frequently asked questions

Should I include RTO cost in my shipping percentage?

Yes. It is a shipping cost, it is often the largest one, and excluding it makes the number useless for decisions.

What is a good shipping cost for a ₹800 order?

Roughly ₹64–₹96 all-in, on the 8–12% band. Above that, look at RTO and volumetric weight before you look at your rate card.

Is it cheaper to use one carrier or several?

Several, allocated per lane, once you have enough volume for the allocation to be meaningful. One carrier is simpler, and simplicity has value below a few hundred orders a month.