Every store that ships physical products already pays for lost, damaged and stolen orders, through refunds, reships and support time. Self-funded shipping protection changes that. Customers who want cover pay a small optional fee, you keep it, and you pay claims from it. The cost you were already absorbing becomes a funded process, and what is left over is revenue.
New to the model? See self-funded vs third-party shipping protection.
How does protection revenue work?
Net protection revenue = orders × attach rate × average fee − claims paid − app cost
- Orders: your monthly order count.
- Attach rate: the share of orders that add protection.
- Average fee: what customers pay per protected order.
- Claims paid: the cost of refunds, reships and store credit for protected claims.
- App cost: your protection app’s plan.
What does it look like in practice?
Example numbers, not benchmarks:
| Store A | Store B | |
|---|---|---|
| Orders per month | 800 | 3,000 |
| Attach rate | 45% | 55% |
| Average fee | $2.50 | $3.50 |
| Fees collected | $900 | $5,775 |
| Claims paid | $180 | $1,400 |
| App cost (Sam Standard) | $9 | $9 |
| Net per month | $711 | $4,366 |
| Net per year | $8,532 | $52,392 |
Run your own version in the shipping protection calculator.
Is it really profit?
Partly. Some of what you would have spent on refunds and reships anyway now comes out of protection fees, so the benefit shows up two ways: new revenue, and costs you no longer absorb from margin. Track both so the full effect is visible.
How do you grow protection revenue?
- Placement: put the widget next to the cart subtotal and in the cart drawer; add a thank-you page offer.
- Wording: one clear line on what it covers, and the price next to the toggle.
- Fair pricing: price bands by cart value so small orders are not overcharged and large ones pay their share.
- Claim experience: a fast, branded claims page builds trust, so repeat customers keep choosing protection.
- Fewer losses: better packaging, address validation and signatures lower claims and raise net revenue.
What should you track every month?
- Attach rate by placement.
- Fees collected and claims paid.
- Loss ratio: claims ÷ fees. Well under 100% means the program pays for itself.
- Support tickets about the fee.
See how much to charge for shipping protection for pricing, and loss ratio for the key health metric.
What can make protection revenue fall?
- A rising claim rate from a new carrier, route or product line.
- A widget that stops showing after a theme change, which quietly drops attach rate.
- Generous claim approvals without evidence, which raise claims paid.
- Price too low for higher-value carts.
Check the dashboard after every theme update and review claims by reason each month so you spot these early.
What about taxes and accounting?
Protection fees appear as their own line item on each order, which makes them easy to report. Tax treatment varies by country and state, so ask your accountant how to handle them.
To start, see Sam Shipping Protection or the shipping protection guide.
Frequently asked questions
How do stores make money from shipping protection?
With a self-funded app, the store keeps the protection fee customers pay and covers claims from it. When fees exceed claims and the app cost, the difference is profit.
Is shipping protection revenue taxable?
Tax treatment of protection fees varies by country and state. Ask your accountant how to report and tax them.
Do provider-funded apps generate revenue for the store?
Usually not directly: the provider keeps the fee in exchange for paying claims. Some providers describe revenue-sharing on certain plans; check the terms.
Part of our guide: Shipping protection →