FedEx earned discounts and base discounts are the main focus of any contract negotiation. As part of a three-part series, Refund Retriever unveils FedEx agreements and contracts’ black and white details. We are breaking down the general outline of FedEx agreements to make understanding them much more straightforward. We review the FedEx agreements’ general design and organization in part one. Looking ahead to part two, we will explain how FedEx earned discounts and base discounts work for FedEx shippers.
Below, explore how base and earned discounts impact FedEx contracts.
FedEx Base Discount Rates
Free and low-cost shipping options are in demand from customers. How are merchants, online sellers, and shippers in general able to keep up? Among the best ways to reduce shipping costs and help meet customer expectations are knowing how to save money from your shipping carriers. FedEx offers base discount rates that are available for all their service levels. Therefore, here are the key things to understand about this include:
Discounts are a percentage off of published base rates found in the FedEx Service Guide, which is available to review here.
Base rates are determined by the distance between the origin and destination (also known as “zone”) and the package charged weight.
These rates do not change with variations in a shipper’s volume.
Published rates increase each year. FedEx traditionally announces a general rate increase at the end of each year.
- Explore the possibility of capping or limiting the yearly price increase within the FedEx agreement.
Keep the following points in mind when reviewing base rates on your FedEx contract. Consider that all services available from FedEx should be identified within your contract and offered a discounted based rate.
Often, Refund Retriever reviews contracts and identifies that many clients use FedEx First Priority Overnight with a 0% discount. Therefore the shipper is paying the published rate, and the sender is paying more than they should.
FedEx Earned Discounts
Very simply, the more you ship, the more you can save when it comes to understanding how earned discounts work with FedEx. A key consideration is ensuring all zones are included within your annualized transportation spend. Additionally, some key tips to consider include:
Earned discounts can be in combination with based discounts with both referring to the annualized transportation charges of your FedEx contract.
As the volume you ship fluctuates, so do the earned discounts you may receive.
All FedEx agreements have a grace period with a grace discount, as further explained in the image below. Grace periods range from 4 to 12 weeks, with your ideal grace period to be as long as possible.
Part 3 – Minimum Charges and Surcharges Impact
Base and FedEx Earned Discounts are significant to all business shippers. Next, Refund Retriever will further explain FedEx agreements and contracts in the final part of this three-part series titled “How Minimum Charges and Surcharges Impact FedEx Contracts.” Be sure you don’t miss any insight from Refund Retriever. Stay in touch with us here.