Shipping Expenses

[Soapsense]

Well I am researching the business part now, I work at a hotel and we have a gift shop. I have been making soap for a few years now and have been just giving it out for gifts to family, friends and coworkers. The GM asked to put my soap in the gift shop.
My question today is about paying shipping expenses. From the money end is it better to pay it separately or included like WSP. It's been a long time since my college accounting classes and the dreaded Cost of Goods Sold equations.

 

[lsg]

You will just have to compare the cost of your supplies plus shipping at other suppliers against WSP. Wholesale Supplies Plus does give reward points for return customers and they offer a weekly sale every Monday usually on one type of supply. Subscribe to their newsletter and they will send you info on each sale.

 

[Soapsense]

Sorry, I wasn't very clear in that question. Hope this is clearer, most suppliers charge a shipping charge, Where as places like WSP incorporates it into the cost of the product. Is one way better than the other for your bottom line or does it not matter. If you are charged shipping is it written off as an expense?
Sorry if I am still confusing everyone.

 

[CaraBou]

Shipping is definitely a cost of doing business, so you should incorporate it into the price of your bars and include it in your expenses on your tax form. As for which way is cheaper, there is no one-cut answer, you'll have to figure it out like lsg said.

My last sentence makes me think I did not interpret you correctly. Sooooo.ap...

Are you asking whether you should include potential shipping charges to your buyer into the price of your soap? For this, I'd say no, charge it separately. I'd think most hotel guests will pack it themselves into their suitcase; therefore they should not pay more to subsidize someone else's shipping expense. If you need to ship soap to a buyer, tack that cost on so that the buyer pays for the full cost.

Do either of those answer your question, or are we still off? :shock:

 

[Lindy]

When I am selling to a wholesale client I charge them the cost of shipping rather than include it in my price. They expect it and will not argue about it. IF you are talking about expensing shipping from a supplier into your cost of your product then I account for it as a cost of doing business rather than include it in the cost of my product for wholesale pricing.

 

[Soapsense]

Thank you both, yes my question was whether to consider it a cost of doing business (expense) or incorporate it into the cost of the bar.

 

[pamielynn]

Shipping to YOU (supplies) is part of your COGS. Shipping to a customer should be just that - charge them to ship a bar of soap. This becomes part of your income. You then pay it out as an expense (say you charge $6.00 to ship to a customer - that's income. When you pay USPS $5.25 to ship it, that's an expense, but you keep .75 as income). Working the shipping costs into your soap price can be a be a bit trickier to someone like me, without good math skills, when you're trying to prove it out at then of the year
Personally, I don't like to buy anything that is "shipping included". It never seems to work out in my favor. This is typically what "Free Shipping" is, unless someone is running a true special.