In ShipHero we use "Marginal billing", this is applied when we have split shipments, especially when we load balance inventory around warehouses. Marginal shipping rates apply for domestic and international orders.
We consider a shipment to be a candidate for being marginally billed when:
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Shipment was shipped from a US warehouse.
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A shipping plan was received in at least 2 SF warehouses.
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There’s only one package in the current shipment.
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No other shipment was shipped in multiple packages.
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No SKU in the order is back-ordered when the package is billed.
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No SKU in the order needs to be shipped in its package.
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The order was previously set as fulfilled and then re-shipped the next day.
- The combined billable order weight is not over 20 lbs. Note: when billing for a package, we consider all valid labels to that day, the process is not strictly sequential. For instance: in a scenario with 3 packages from 3 different warehouses, if packages #2 and #3 were shipped the same day (UTC), the billing process would still consider the weight of package #3 when determining the 20 lb rule for package #2.
How does it work?
While billing, we check if we shipped the order in a split shipment - from 2 or more warehouses.
If that's the case, we calculate the shipping cost of this second shipment as the difference between:
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Shipping both packages separately
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How much would it have cost to send all SKUs from both containers in the same box
Example:
Let's say we have an order partially shipped from 2 warehouses. If we already billed for the first shipment of 10 lb and now have a second 3 lb shipment, we calculate the shipping rate for this second shipment as f(13) - f(10).
Example 2:
Calculation:
f(a) - f(b) = s
- Where f = the fulfillment rate from Schedule A: Pricing
- Where a = the weight for the first shipment
- Where b = the weight for the second shipment
- Where s = the net cost as if the products were shipped from the same location in the same shipment.
In other words, we do not bill for 2 orders, we will bill the cost as if the products were shipping from the same location.
