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FedEx Agreements: Everything Business Sender’s Need to Know, Part 2 – How Do the Base and Earned Discounts Work?

By Last updated on: April 23, 2019

As part of a three-part series, Refund Retriever is unveiling the black and white details of FedEx agreements and contracts. We are breaking down the general outline of FedEx agreements to make understanding them much easier. In part one, we reviewed how these FedEx agreements are organized. Looking ahead to part two, we will explain how the base and earned 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 be proactive in reducing your shipping costs and helping to meet customer expectations begin with knowing how you can save money from your shipping carriers. FedEx offers base discount rates that are available for all their service levels. Among 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 charged weight of the package.

  • These rates do not change with variations in a shipper’s volume.

  • These rates do change each year with yearly price increases that are traditionally announced by FedEx at the end of each year.

  • The possibility to cap or limit the yearly price increase is often identified within FedEx contracts.

Keep the following points in mind when reviewing 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 0% discount and instead are paying the published rate. This risks sender paying more money then 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 factor to consider is to make sure 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.

FedEx Agreements – Part 3 Coming Soon

Finally, 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”. To be sure you don’t miss any insight from Refund Retriever, stay in touch with us here.

FedEx Agreements
FedEx Agreements
Brian Gibbs

Author Brian Gibbs

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Brian Gibbs | President of Refund Retriever

Brian Gibbs founded Refund Retriever in 2006 while running his first eBay based business and seeing the shortcomings of other shipment auditing companies. Refund Retriever's primary focus is FedEx and UPS parcel invoice auditing. After graduating from Texas A&M University in 2001, he then graduated from the University of Houston in 2004 with a JD and MBA. Gibbs has been featured in Forbes, Entrepreneur and other publications discussing parcel auditing, shipping, e-commerce and more. Learn more at www.refundretriever.com or call (800) 441-8085 for more information.

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