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Since 2017, we’ve conducted one of the longest-standing warehouse pricing surveys in the industry, gathering data from over 600 warehouses each year. The survey includes 62 questions focused on warehousing costs, pricing, and performance metrics. This data gives you a clear understanding of fulfillment cost, helping your business stay competitive and helping you secure the best rates.
Fulfillment providers offer discounts based on the volume of orders, storage, and shipping. Here’s how discounts typically break down:
Many providers offer contract incentives for locking in longer terms, such as yearly or multi-year agreements. This is beneficial for businesses as 72% of fulfillment companies reportedly increase prices annually, with average increases ranging from 3-7%.
At ɫAndFulfillment.com, we specialize in connecting you with trusted and cost-effective 3PL providers. Fill out our form or contact us today to get started.
When partnering with a third-party logistics (3PL) provider, many warehouses and fulfillment centers use activity-based pricing. This means warehouse operators or fulfillment providers charge businesses for each specific service or “activity” they perform on behalf of the business. Typically, the 3PL provider will total up the activities they’ve completed for your business over the course of the month and issue a monthly invoice, though some may bill more frequently, like bi-monthly.
If you’re a business looking for fulfillment services, here are the main fees you’ll likely encounter when working with a 3PL:
The cost of integrating with a 3PL varies depending on the complexity of the setup. Basic integrations like web store connections or EDI setups typically range from $150 to $1,500, with more complex systems costing even more. Be aware that some 3PLs may also charge recurring monthly fees for system maintenance, ranging from $10 to $500.
Receiving is one of the first line items where costs may add up. This includes the time spent counting, inspecting, and labeling goods as well as storing them in the 3PL’s facility. Handling discrepancies, like damaged or incorrect shipments, can also lead to additional charges, so knowing how these are addressed can help avoid future costs. Access to real-time inventory updates is helpful but often comes at a premium.
Storage fees can quickly inflate your costs, especially depending on how the 3PL charges—by pallet, square footage, or cubic footage. Knowing how inventory is counted (daily, weekly, or monthly) also plays a role in managing costs, as inaccurate counts can lead to higher charges. Understanding this structure will help control unnecessary fees.
Amazon FBA fees often surprise businesses, with costs piling up for required services like labeling, SKU preparation, and storage. Planning for these expenses in advance can prevent overages and unnecessary spending, especially when dealing with high SKU counts.
Fulfillment fees can vary widely and may hide additional costs if you don’t get a clear breakdown upfront. Some 3PLs offer low order fees but offset that with higher packaging or handling charges. Make sure to confirm who covers the cost of boxes and packaging to avoid surprise expenses later.
Inbound shipping fees cover the cost of getting products from your supplier to the 3PL’s warehouse. Many 3PLs have negotiated discounts with carriers, but you need to ask how these savings are passed on to you. Comparing the 3PL’s rates with what you would pay independently is a good way to assess whether you’re getting a fair deal.
Outbound shipping fees cover the cost of sending products to your customers. While 3PLs often get better rates through their existing carrier relationships, it’s important to confirm if these savings are fully passed on to you. Ask for a detailed breakdown of per-shipment costs and watch out for hidden fees, particularly with international shipments.
At ɫAndFulfillment.com, we specialize in connecting you with trusted and cost-effective 3PL providers. Fill out our form or contact us today to get started.
Working with a 3PL can also involve occasional fees that aren’t part of your regular expenses. These costs can still impact your budget, so it’s important to plan for them accordingly.
Box fees are typically charged separately from fulfillment services, and depending on the size, material, and frequency of your shipments, they can amount and add to your costs. Some 3PLs might offer discounts for bulk box purchases, while others may apply a markup. Clarify whether these charges are passed through directly or come with an additional margin.
Order insert fees cover the cost of adding extra materials like invoices, promotional inserts, or instructions into customer orders. Though individually small, these fees can add up quickly, particularly for high-volume businesses. Each extra step in the fulfillment process—whether it’s adding a label or shrink-wrapping—comes with an additional cost, so factor this into your fulfillment budget if you plan to use inserts frequently.
Handling returns often includes inspection, restocking, and sometimes repackaging, which drives up costs. Returns are labor-intensive, and fees can vary based on how complex the return process is. For businesses with high return rates, these fees can quickly add up, so you MUST understand how your 3PL manages returns and whether any parts of the process can be automated to reduce costs.
Kitting, or assembling multiple items into a single package, is often necessary for businesses offering subscription boxes or gift sets. Since this process requires extra labor, kitting fees are typically charged by the hour. For businesses that frequently bundle products, these costs can accumulate quickly. Make sure to ask your 3PL partner has efficient kitting capabilities to keep costs manageable.
Account management fees cover ongoing oversight and support from your 3PL, such as inventory tracking and performance reviews. These fees can range widely depending on the level of service provided. For businesses with complex needs, paying for more proactive account management may reduce internal strain, but it comes at a higher cost. For smaller businesses, a lower level of support may be sufficient and more cost-effective.
Outsourcing customer support through a 3PL’s call center can save internal resources, particularly for e-commerce businesses that deal with a high volume of customer inquiries. However, these services can get expensive, especially if your call volume is high or you have long call durations. Evaluate whether the convenience of outsourcing customer service offsets the cost for your business, and look into flat-rate options if your call volumes are consistent.
At ɫAndFulfillment.com, we specialize in connecting you with trusted and cost-effective 3PL providers. Fill out our form or contact us today to get started.
At ɫAndFulfillment.com, we specialize in connecting you with trusted and cost-effective 3PL providers. Fill out our form or contact us today to get started.
Be aware of hidden fees, bait-and-switch tactics, or inflated shipping costs. Always provide your monthly projections and request a sample invoice for transparency.
Fulfillment costs vary with product prices. The most efficient companies operate at 8-10% of gross sales, with averages around 10-15%. Higher costs may reach 20% for less automated companies.
Request a mock invoice with specific assumptions from each 3PL to get an accurate, fully loaded comparison.
Outsourcing reduces costs like rent, labor, and shipping through volume discounts, shared space, and advanced technology, allowing you to focus on growth.
Compare all costs—labor, rent, utilities, insurance, supplies, shipping, and management time—between in-house and outsourced fulfillment to determine the best option for your business.
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