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Billing for shipping labels

You can purchase shipping labels directly from your Shopify admin, and all charges are billed to the credit card on file for your Shopify account. The cost of shipping labels is displayed in your local currency before taxes, such as EUR in France or GBP in the United Kingdom. After you buy a shipping label, the cost and the taxes are billed to you through your Shopify account. You pay your bill in the currency that you have set up for your billing.

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Shipping label charges

Shipping label invoices are based on threshold billing. This means that as soon as you spend a certain amount on shipping labels within your billing cycle, you're invoiced and charged immediately. As you wait for the payment to be processed, you can continue to purchase labels until you reach 110% of your current threshold. After the invoice is processed, your threshold resets.

If you don't reach this threshold within your billing cycle, then the shipping label charges are added to your monthly Shopify subscription bill.

Learn more about billing thresholds.

Threshold billing example

If your billing threshold is $400 USD and you purchase shipping labels totaling $400 USD, then you receive a bill immediately. You can continue purchasing labels until your total reaches $440 USD (110% of $400 USD). After you pay your $400 USD bill, your threshold resets and you can resume purchasing labels normally.

View your shipping label charges

You can view your shipping label charges in the Bills section of your Billing page in your Shopify admin.

Steps:

  1. From your Shopify admin, go to Settings > Billing.

  2. In the Bills section, click the bill you want to review.

  3. Review the Shipping section to view shipping label charges.

  4. Click the number of shipping fees to view a breakdown of charges by order.

Shipping label refunds

Any refunds issued for shipping labels are added as a shipping label credit to your account. Credits are applied to future shipping label purchases.

To void a shipping label and request a refund, refer to voiding shipping labels.

Price adjustments

A shipping label price adjustment occurs when you purchase a shipping label and the shipping carrier determines that you've provided inaccurate information that results in an incorrect shipping label price. After you ship your order, the correct shipping label price is verified by the shipping carrier. If you paid an incorrect amount to ship the order, then your carrier credits or debits you the difference. Your package might still be delivered when there is an adjustment.

Price adjustments are a standard industry practice and most shipping carriers follow this standard. To avoid price adjustments, verify that you're entering the correct information when you're purchasing a shipping label.

Due to shipping carrier processing times, it's not uncommon for there to be a delay between when you purchase the shipping label and when you receive the charge or credit for a price adjustment.

Reasons for price adjustments

If your carrier determines that your shipment needs a price adjustment, then the adjustment displays in the order's timeline. You'll receive a charge or credit to your Shopify account, which will display on your next bill.

The following examples are possible reasons for price adjustments:

  • The package weight specified on the label doesn't match the actual weight of shipment.
  • The package dimensions specified on the label don't match the actual dimensions of shipment.
  • A flat rate label is used with a weight-based rate box, or a weight-based rate label is used with a flat rate box.
  • The specified mail class is incorrect. For example, the packaging weight is above the maximum threshold for that mail class.
  • The shipment isn't fully encased in a cardboard box. For example, the shipment is encased in an irregular material, such as metal, wood, hard plastic, soft plastic, or expanded polystyrene foam.
  • The shipment is sent using a non-supported package type, such as a tube-shaped package.
  • The content of your package doesn't fit mail class restrictions.
  • The carrier charged a fee for preparing your shipment or non-customs documentation.
  • The carrier charged a fee for address correction.
  • The carrier charged return to sender fees.

If you have questions about a price adjustment, or think that a price adjustment was wrongfully applied, then refer to Disputing a price adjustment.

Over maximum limit adjustments

Carriers have maximum package sizes and weights. If a shipment is larger than the maximum size or weight, then they can charge you substantial fees.

For example, if you're using UPS and your package weighs more than 150 pounds, then you can be charged more than $875 USD for being over their weight limit. You can also be charged fees if the package dimensions exceed the carrier's limits. The UPS website has information about their Over Maximum Limits.

Avoiding adjustments

You can avoid overpaying or underpaying for your shipping labels by making sure that your shipping and product settings are accurate.

There are a few things you can do to make your shipping labels more accurate:

  • Weigh the item that you're shipping and enter the weight into its product details page.
  • Use a supported package type.
  • Measure and weigh your packaging.
  • Make sure that your fulfillment locations and shipping destination zones are correct.
  • If your carrier uses dimensional weight, then configure your default package dimensions.
  • Review your carrier's mail classes to make sure your shipment is classified properly.
  • Measure the outside dimensions of your package, not the inside dimensions listed on the box.
  • Round measurements up to the nearest whole inch, as carriers typically round up during scanning.
  • Ensure that packages are well-sealed to prevent box flaps from opening during transit.
  • Secure products inside the package to prevent shifting that could cause bulges.

Dispute a price adjustment

If you believe that a price adjustment was applied incorrectly, then review the adjustment details in the order timeline before you contact Shopify Support.

Steps:

  1. From your Shopify admin, go to Orders.

  2. Click the order that has the price adjustment.

  3. In the Timeline section, review the adjustment reason provided by the carrier.

  4. Compare the adjustment reason with the actual package details, such as weight and dimensions.

  5. If you believe the adjustment is incorrect, then gather the following evidence:

    • Photos of the sealed package next to a measuring tape, displaying length, width, and height.
    • Photos of the package on a scale, if the dispute is weight-related.
    • The tracking number for the shipment.

  6. Contact Shopify Support with the order number, adjustment reason, and your evidence.

Taxes on shipping labels

Each country has different tax rules for shipping labels. Review the tax rules for the country where you ship products from.

If you ship to the European Union, then you can register to collect VAT at checkout on certain orders so that customers in the European Union don't need to pay taxes upon delivery.

Australian domestic shipping labels are taxable, but international shipping labels aren't. However, you don't pay tax if you meet all the following conditions:

Shipping labels are taxed based on the rate applicable at the label's destination. Taxes aren't included in the cost of the shipping label at the time of purchase in your Shopify admin. Taxes are added to your invoice together with the shipping label purchase when you're billed.

When you purchase Canada Post shipping labels through Shopify, taxes are calculated automatically based on your location and your customer's address. These taxes are separate from the Charge tax on shipping rates setting in your store—shipping label taxes are applied regardless of that setting. The following tax rules apply to Canada Post labels:

  • GST (Goods and Services Tax) or HST (Harmonized Sales Tax): Applied based on the rate in the destination province.
  • QST (Quebec Sales Tax): Applied only when the shipment originates in Quebec and is sent to a Quebec address.
  • PST (Provincial Sales Tax): For shipments to British Columbia, PST is applied to both the shipping cost and taxable products.

Canada Post labels are purchased in CAD but billed in USD on your Shopify invoice. The exchange rate is determined daily at noon using market rates. If you're billed in CAD, then a 1.5% currency exchange fee applies to the conversion. Learn more about local currency billing.

No taxes are charged on shipping labels purchased in France.

No taxes are charged on shipping labels purchased in the United Kingdom.

Taxes are charged for shipping labels that are purchased in the following states:

  • Arizona
  • District of Columbia
  • Hawaii
  • New Mexico
  • West Virginia

Shipping labels are taxed based on the applicable rate at the label's destination. Taxes aren't included in the cost of the shipping label at the time of purchase in your Shopify admin. Taxes are added to your invoice together with the shipping label purchase when you're billed.

If you believe that you qualify for a tax exemption, then learn how to apply for a billing tax exemption. You can also contact Shopify Support to provide your exemption certificate.

Collecting VAT at checkout for customers in the European Union

As of July 1, 2021, you can collect VAT at checkout from your customers in the European Union (EU), instead of your customers paying taxes upon delivery of their order.

If you're outside the European Union and you want your Shopify store to collect VAT at checkout, then you need an Import One-Stop Shop (IOSS) scheme, also called a Non-Union One-Stop Shop (OSS), and to add your IOSS number to your Shopify admin.

Before you begin

Review the following considerations and requirements for collecting VAT through IOSS:

  • Businesses outside the European Union that ship to customers in the European Union aren't required to collect VAT at checkout.
  • Review the IOSS European Union tax reference to understand when you can collect VAT.
  • You need to apply for IOSS through an EU country member. After you receive your IOSS number, you need to add it to your tax registration in your Shopify admin.
  • Before you can add your IOSS number to your Shopify admin, you need to set up a shipping profile for the European Union.

Add your IOSS number in your Shopify admin

  1. From your Shopify admin, go to Settings > Taxes and duties.

  2. In the Tax regions section, beside European Union, click Manage.

  3. In the Shipping to the EU section, next to VAT on sales to the EU, click Collect VAT.

  4. From Registration country, select the country where you registered for IOSS.

  5. In IOSS VAT number, type your IOSS number.

  6. Click Collect VAT.

Troubleshooting shipping label billing

Use the following information to resolve common issues with shipping label billing.

If you can't purchase shipping labels, then you might have reached your billing threshold and have an outstanding bill.

Steps:

  1. From your Shopify admin, go to Settings > Billing.
  1. Check if you have an unpaid bill in the Bills section.
  2. If a bill is due, then click Pay now to pay the outstanding balance.
  3. After the payment is processed, try purchasing a shipping label again.

If you notice unexpected shipping charges on your bill, then review the following possible causes:

  • Price adjustments: A carrier might have adjusted the price of a label after scanning your package. Review the order timeline for any adjustment notices.
  • Threshold billing: If you purchased many labels quickly, then you might have triggered a threshold bill before your regular billing date.
  • Currency conversion: If your store is in Canada and you purchased Canada Post labels, then the charges are converted from CAD to USD, which might result in different amounts than expected.
  • Taxes: Shipping label taxes are added at billing time, not at purchase time, so the billed amount might be higher than the label price displayed during purchase.

You can identify the source of a charge by viewing your shipping fees in your Shopify admin.

Steps:

  1. From your Shopify admin, go to Settings > Billing.
  1. Click the bill containing the unexpected charges.
  2. In the Shipping section, click the number of fees to view a breakdown by order.
  3. Click the order number to go directly to the order and review the label details that display in the order timeline.

If tax charges display for a different location than your store address, then this is usually because shipping label taxes are based on the destination address, not your store's address. For example, if you ship a Canada Post label to Quebec, then QST might apply even if your store isn't in Quebec.

Review the taxes on shipping labels section for information about how taxes are calculated in your region.

If the cost of your shipping label differs from what your customer paid at checkout, then this might occur for the following reasons:

  • Different rate sources: If you display Shopify Shipping rates at checkout but purchase labels through a third-party app, then the rates won't match. Shopify Shipping offers discounted rates that are separate from third-party providers.
  • Markup settings: If you've added a markup to your shipping rates, then customers pay more than the base carrier rate.
  • Price adjustments: If the carrier adjusted the label price after scanning, then the final cost will differ from the original purchase price.

To ensure consistent pricing, either use Shopify Shipping for both rate display and label purchase, or configure your checkout to display rates from your third-party label provider.

Frequently asked questions

Review the following frequently asked questions about billing for shipping labels.

Shipping labels are billed immediately when you reach your billing threshold. If you don't reach your threshold during a billing cycle, then shipping label charges are included in your monthly Shopify subscription bill.

The initial label purchase and any subsequent price adjustments are separate charges. Price adjustments are applied by the carrier after your package is scanned, which can be days or weeks after the original purchase.

If you void a shipping label before using it, then the refund is issued as a credit to your account. This credit is automatically applied to future shipping label purchases. Learn more about voiding shipping labels.

Shipping label taxes are determined by local tax laws and are based on the destination of your shipment. In some regions, shipping services are taxable. These taxes are added to your invoice at billing time. If you believe you qualify for a tax exemption, then learn how to apply for a billing tax exemption.

To minimize price adjustments, accurately weigh and measure your sealed packages before purchasing labels. Use the outside dimensions of your packaging, round measurements up to the nearest whole inch, and ensure your packages are well-sealed to prevent changes during transit. Refer to avoiding adjustments for more tips.

The final shipping charge on your bill might differ from the price displayed when you purchased the label for the following reasons:

  • Price adjustments: The carrier scanned your package and determined it was a different size or weight than specified.
  • Taxes: Shipping label taxes are added at billing time, not during purchase.
  • Currency conversion: For Canada Post labels, the CAD price is converted to USD on your invoice.

Review the label cost differs from checkout shipping rate section for more details.

If your price adjustment dispute is denied by the carrier, then the original adjustment charge remains on your account. Disputes require clear photo evidence of the package dimensions or weight. If you didn't provide adequate evidence, then you might be able to recreate the shipment and resubmit the dispute with proper documentation.

Using labels long after purchase can cause billing issues. Carriers might invoice you directly, and for UPS labels, unpaid invoices can result in late charges or suspension of your ability to purchase labels. USPS might charge the recipient for outstanding postage. For international shipments, customs might reject packages if Electronic Advanced Data (EAD) is no longer available (typically archived 45 days after the shipping date). You can only void labels within 30 days of purchase.

Before you contact Shopify Support

Before reaching out to Shopify Support, gather the following information to help resolve your issue faster:

  • The order number(s) affected by the billing issue.
  • Screenshots of your bill displaying the unexpected charges.
  • The date the charge appeared on your bill.
  • For price adjustment disputes:
    • Photos of the package with a measuring tape displaying length, width, and height.
    • Photos of the package on a scale (for weight disputes).
    • The tracking number for the shipment.
    • The carrier's adjustment reason (visible in the order timeline).
  • For tax-related questions:
    • Your store's business address.
    • The destination address of the shipment in question.
    • Any tax exemption certificates you believe should apply.
  • Steps that you've already tried from the troubleshooting section.