Shipping Charge Calculations
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Contents |
Overview
Shipping charges (S&H) in CMS can be calculated and affected in several ways. This article will elaborate on the settings and actions that control shipping charges.
Order vs Invoice
The first point to be clear on is that CMS charges are all order-driven for standard and fulfillment invoices. This means that the financials for the invoice are a subset, or pulling from, the order total. In other words, the order (summary) is not a sum of the invoices per se, the invoices are derivatives of the order. This is an important distinction to understand, particularly as it relates to S&H, since the total/max S&H charge is determined at the time of order save and all subsequent fulfillment invoices will be deducting from that total.
We believe the initial order placed by the customer is a form of contract to deliver goods at an agreed upon price. CMS was designed to help our users meet the terms of that purchase contract by ensuring that the sum of all of the fulfillments do not exceed the financials in the order total, including the shipping charge.
This behavior is different than returns and exchanges which are modifications to the original sale and thus those invoices can have their own S&H and other financials not driven by the order. In other words, returns and exchanges will update the order summary totals while fulfillment invoices will always be a subset of the order totals.
Fulfillments
With the above in mind, the next question might then be - "How does CMS calculate S&H for fulfillments?" As you might now guess, S&H for a fulfillment invoice can only equal to or less than the original S&H charge on the order, if any at all. CMS will use the applicable S&H formula on the -1 invoice (just for the items fulfilling on that invoice). If the formula comes up with any amount up to the order's S&H total, that amount will be used. If the formula comes up with a higher amount the the order's S&H, CMS will then use the order's S&H.
For each fulfillment, CMS will repeat the above, use the applicable formula and use the lower of the two amounts:
- Formula calc for the new invoice
- Amount of the order's S&H that has not been charged yet (order S&H total - S&H assessed on all invoices)
This methodology for calculating S&H charges has the following benefits:
- It ensures that the total S&H charged never exceeds the order's S&H total
- It front loads S&H charges so that if a customer later cancels the unfulfilled items, you have still collected appropriate S&H fees for the items that have shipped
Exceptions
There are three exceptions to the above behavior:
- Bill Delayed - The full S&H amount will appear on the -1 (as do all the order financials) - EXAMPLE
- Fulfillment option to "Apply Shipping Charges to first Fulfillment" - Full S&H will appear on the first fulfillment invoice (not necessarily -1, if nothing is shipping on -1, for example) -SETTING
- Manual overrides - For imported orders or for those you manually typed in a shipping charge, both of these supersede CMS's formula calculations. In such cases CMS cannot know how your charge was calculated and, to be safe, will apply the full S&H to the first fulfillment, as if you had the Fulfillment option above checked.
Recipients
As of version 9.0, CMS can apply S&H formula calculations to each recipient as if each was a separate order. This option must be enabled in Setup>Shipping>Shipping and Handling
Locking Shipping Charges
In most cases CMS will be updating your shipping and handling (S&H) charge as you enter and modify the order. This section explains when CMS does this and what you can do to lock in the charges.
1) If CMS set the shipping charge on a new order (unsaved, temp, or proforma), that shipping charge is still considered in flux and will be changed automatically (based on any changes made to the order, formula, or surcharges) any time the order is edited, and does so without warning.
2) After the order is saved as a completed order, the shipping charges will no longer update automatically BUT you will be asked if you want it updated if you make any change on the Items or Shipping tabs (actions that could affect the shipping cost.) When this happens you'll see the familiar prompt - 'Do you want to recalculate shipping charges'.
3) Once the invoice is shipped, those shipping charges are locked in permanently.
For #1 above, it is based on a scenario where CMS has set the S&H charge automatically and, as such, CMS thinks it can and should continue to do so until saved/shipped. You can, however, override this by setting the S&H charge manually. Once you do this, CMS knows this is no longer a field it should update automatically and it will leave it as-is despite any order edits. This is true even if you set the amount to the same value CMS calculated.
In other words, if you want to lock the shipping charges, just type it in, even if it is the same amount. Otherwise CMS will think it should continue to maintain this field until saved as complete or shipped.
When you've manually typed in a shipping charge, the label for the Shipping field becomes a link, with a blue underline. This is a visual indicator both that the shipping charge is locked and that you can click the link to reset it to what CMS thinks it should be. Example - http://screencast.com/t/W29v9y4ho
The above is true only for the order level shipping charge, not the invoicee. For orders that are only partially fulfilled, the shipping charge on the invoice is always calculated based on the formula (or set to match the order level shipping charge if it was manually set.)
Shipping vs Handling
It is common to hear shipping charges referred to as Shipping and Handling (S%H). The reason it is called S&H is to encompass internal "handling" fees that you might impose as well as the external carrier fees "shipping". It also helps to convey that the charges are not purely the carrier's actual cost. In practice, however, CMS calculates a single charge and there is not a separate formula for handling nor is handling a component of the S&H charge. As such CMS cannot split out handling fees from the shipping charge nor can they be taxed separately.
