Prepaid Shipping
Also known as: Prepaid, Shipper Pays, Prepay
Definition
Prepaid shipping is when the shipper pays freight charges at origin before the carrier picks up the package. It’s the most common arrangement for e-commerce and most B2C shipments.
Prepaid vs. Collect vs. Third-Party
| Term | Who Pays | When Paid |
|---|---|---|
| Prepaid | Shipper/Sender | Before shipment |
| Collect | Receiver | Upon delivery |
| Third-party | Another party | As billed |
When to Use Prepaid
- E-commerce orders
- Customer purchases with “free shipping”
- When controlling shipping costs
- Building shipping into product price
- Most consumer shipments
Prepaid Advantages
For shippers:
- Control over carrier selection
- Volume discounts applied
- Predictable costs
- Simpler customer experience
For receivers:
- No surprise charges
- Clean delivery process
- Total cost known upfront
Prepaid and Add
A variation where:
- Shipper pays carrier
- Adds shipping to customer invoice
- Customer reimburses shipper
Common in B2B when:
- Shipper has better rates
- Customer wants specific carrier
- Contract specifies this arrangement
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