I've flip-flopped in the way I've handled this for my ecommerce transactions over the years. Most shopping cart software provide alternatives on how to handle every aspect of an online sale. It's up to you which charges you are obviously passing on to your customers, such as sales tax and shipping, and which you absorb and pay through your mark-up. Make sure however, you decide to handle your internet transactions that your policies are cleared spelled out.
Marking Up Your Arts and Crafts Prices to Account for Shipping
Just to make it clear, when I talk about the arts and crafts business paying for sales tax and shipping, what I really mean is that I set my product prices to absorb these two costs. I have a basic formula that I use which changes as the basic cost to ship Unites States Postal Service (USPS) goes up. For example, let's say it cost $5.95 to ship USPS with a delivery confirmation; I add that amount to the sales price of the item and call it a day.Marking Up Your Arts and Crafts Prices to Account for Sales Tax
Ok, I've done this on and off over the years for my ecommerce sales. However, it's kind of an unwieldy way to manage sales tax collection. If you have a shopping cart that you can program to collect sales tax in applicable states, at the correct rate, I recommend you let the shopping cart do the work for you.
If not, here is one way you can handle collecting sales tax:
Based on experience, I figure that I end up shipping to states in which I have to collect and remit sales tax about 2% of the time, so I automatically round up my sales price on all items to account for the sales tax I actually do have to remit. For example, if my retail price for an item is $14.95, I add $5.95 for shipping and add some cents for sales tax, making the final retail price $20.95. Over the course of the year, I pretty much break-even on the amount of sales tax I collect and the amount I remit to the state Department of Revenue.
Arts and Crafts Customer Advantage
Of course, for this to be effective, you have to make sure that your customers realize how this is working for them. That is - that the price listed for the item they are interested in purchasing includes shipping or sales tax or both. What they see is all they pay - period. I list this as part of my site policies, I also add a blurb in the description of each item I have for sale.I started doing this because as an online customer myself, I find it vexing when the shipping price is ridiculously high as compared to the item price. If the Ecommerce site is poorly set up, you'll not know what shipping is going to cost until you're at checkout. I really get aggravated because I've wasted all that time putting in my personal shipping and credit card information for a purchase that I usually end up cancelling.
Arts and Craft Business Disadvantage
The one disadvantage of this method is the fact that the customer initially sees the total price of purchasing the item instead of a lower initial price when shipping charges are loaded at the back-end during the checkout procedure. So head-to-head with another vendor option, your customer will initially perceive the other vendor's price as being less.
However, here's how I look at the whole process. Using the example from above, if $20.95 is a price the market will bear for whatever it is I'm selling, then the fact that shipping is front-loaded shouldn't discourage the customer from purchasing. Quite the opposite, it should give them one more reason why they should buy the item. That reason of course is the fact that shipping is free!.
What About Multiple Items in One Order?
If your Ecommerce orders regularly include more than one item, adding shipping costs to the purchase price might not work for you. Based on how big or heavy the items are that you're selling, you may end up under or over charging the customer for shipping costs.
Bottom line - you have to look at your particular arts and crafts busines to decide what shipping and sales tax Ecommerce policies will work best for both you and your customer.
