Posted in Finance, Accounting and Economics Terms, Total Reads: 365
Definition: Handling Costs
Handling costs are costs implied on consumer other than selling price of product. It can be different for different industries. For e-commerce it can include warehouse storage costs, shipment cost, and packaging cost. For Insurance industry it can mean processing and administration costs of insurance claims. Thus, for them costs incurred by insurance company in processing insurance claim is handling costs and that may be levied from customers.
For manufacturing companies it can be coordination and integration of operations such as packing, unpacking, re-packing and movement of materials and goods over a short distance.
Handling costs include coordination of operations like movement of materials, packing, repacking etc. handler is required to integrate all such operations.
Example- an E-commerce company following a Hub and Spoke model – Goods will have to be packed and made fit for transportation to avoid any damages. Then transported from one spoke to other through hub and then last mile delivery. All these will involve packaging, transportation costs. Also man power required to carry out operations will come at some costs. These costs are known as handling costs.