What do we need to know about Fulfillment Center Pricing
Shipping and Fulfillment is an excellent service that can help you provide customers with their ordered products. In this piece, we will look at fulfillment center pricing. Outsourcing, leasing space, and managing the process yourself are all options.
It’s not enough to know what your customers want. It would help if you found the perfect balance between inventory and profits, which will result in happy customers who get their packages on time.
You must have an efficient storage system and a well-established fulfillment strategy to find a balance.
To compete with other eCommerce businesses, B2B and B2C companies should consider outsourcing their shipping needs. This will lessen overhead expenses while improving delivery speed and accuracy.
You might be wondering how much it costs to outsource your inventory, but the answer is different for everyone. We have a thorough guide that can help.
We will tell you the fulfillment center pricing, what it costs a typical eCommerce vendor to outsource Fulfillment, and how this is a more cost-effective solution for most sellers.
How to calculate the cost of outsourcing completion?
1) Fees for Initial Setup
There are many types of eCommerce businesses. Every company is different in selling its products and distributing them to the customer.
This is why most fulfillment bases have an initial setup cost, which helps cover the cost of getting started.
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There is a wide range of prices, but the more elevated end, the larger companies.
2) Fees for Intake and Receiving
If you’re going to be using a fulfillment center, they’ll need procedures for accepting inventory from the supplier. This means the process of receiving new orders and organizing them in their warehouse.
These fees usually include everything that goes into the warehouse upon arrival, such as sorting and unloading.
For example, if you’re storing small items or products with an order fulfillment center, then this fee will be charged on a per-item basis.
- By the hour, at prices ranging from $20 to $550 per hour, fulfillment center pricing.
- on a unit basis, it is ranging from $5 to $20 per pallet. There are businesses that charge receiving each item, which could cost around $.20 per item.
3) Storage Charges
You will have to pay for your storage space to keep your inventory secure and safe until it’s shipped. Storage fees and fulfillment center pricing are based on how much room your products take up, but they might differ depending on what vendor you’re using and what product you sell.
- Storing products by the pallet is generally considered a cost-effective alternative, at $5-$15 each month, an excellent average of about $10 per month.
- How to store stuff to make sense and not leave with any dead space? The average price per cubic foot for keeping things costs $0.30-$0.55/month.
- The good news is that if you’re looking for something small, such as a calculator or an office supply, then the storage bin will be inexpensive. It’s about $1 to $2.50 per individual box.
Have you ever wondered how much your goods would cost to store? We’ve created a handy chart that shows the price per square foot and storage costs for various products.
4) Charges for Order Fulfillment
One of the most costly aspects of e-commerce is fulfilling orders. You may view these fees as a pack and pick fee: finding products in storage or vendors and then packaging them for shipping.
Typically, this fulfillment center pricing covers the cost of both what you’re shipping and whatever it takes to ship it. Some fulfillment providers charge extra for packaging materials.
Sometimes you’ll have to deal with either a flat fee or one based on individual costs of items. If it’s just for B2C, the average price of a package is about $3.
This means that some companies will ask you to pay the same amount of money, whether it’s one or ten items in your cart.
The company offers a discount for bulk orders of 50 or more, but there is also an order minimum that customers must meet before they are eligible to take advantage of the special deal.
5) Shipping Fees
You can use either the carrier account or the fulfillment center’s shipping account to settle the costs. Using your budget is more transparent, and you have a lot of control over what happens.
Using the warehouse’s shipping account might give you discounted pricing because of their higher shipment volumes.
Shipping is challenging to estimate since it depends on the weight, size, and specific carrier charges. However, if you’re ordering many products per month at higher service levels, fulfillment center pricing and shipping costs will be lower.
6) Fees for Kitting and Return
Some of the fees may be dependent on which fulfillment center you use. However, for most people, there are universal charges.
You will often find that kits and return fees are familiar with most things you buy.
- Return fees are the costs of bringing in damaged or unsuitable for the client. They include inspecting defects and either re-assigning them to inventory or disposing of them, which is usually at about the exact cost as fulfillment fees, if not a little higher, because there’s more inspection involved.
- Assembly fees are often based on the time it takes to assemble a product. For example, if it takes 60 seconds for an employee to put together one item and gets paid $60 per hour, that assembly fee would be $1. If you have six items in your kit and each takes 10 seconds apiece (which is 1 minute) at the same pay rate ($60/hour), this will cost you about 2 dollars total.
7) Fees for Account Management
Fulfillment centers charge a monthly fee for management services. This covers customer service calls on the supply chain, updates to the inventory and fulfillment process, and other activities that go beyond what is required in daily operations.
- If you’re paying for account management services, expect to pay anywhere from $75-250 per month.
- When it comes to fulfillment centers, they charge an additional $40-$60 per hour for any services you need.
8) Discounts for Large Orders
When you have a lot of orders, it’s more cost-effective to outsource. The volume discounts at fulfillment centers can make outsourcing much cheaper.
According to the latest FulfillmentCompanies.net survey, more than 50% of warehouses offer an average discount for storing 250 pallets or more per month. According to that same study, fulfillment costs are also on a decline.
If you’re a business that ships more than 1,000 orders per month, it’s pretty common to have some discount for the various fees. In addition to discounts on packing and pick-up costs, if your company has an extended contract with any logistics provider, they’ll likely be willing to negotiate better rates in exchange for extended term contracts.
Outsourcing vs. Current In-House Expenses
Determining the cost of a fulfillment center is quite tricky. There are so many variables and factors to consider that it’s hard to predict what will happen in advance.
You will need to provide accurate data, including the orders processed and items on each order.
You need to provide more data to estimate shipping costs better, but the insights will help immensely. For example, if you tell us what size package is being shipped and how far it needs to go by zip code and any other specifics like weight or dimensions for one month’s worth of shipment records, we can estimate.
If you don’t want to contact any companies about potential costs, do quick math and estimate the savings. Most eCommerce businesses see:
- The costs of fulfilling your company’s orders will be a lot lower than you might think.
- The storage cost in a fulfillment center is lower than your warehouse lease expense, especially if you have inventory that fluctuates all through the year.
- The best way to save on shipping costs is by considering a fulfillment center. Just ask your UPS or FedEx representative what kind of discount you have for ground and express shipments, then compare it with the average values offered at these centers to see if there will be any savings.
- Order volume will positively affect the discounts. If you are a high-volume seller, it may be worth outsourcing your Fulfillment.
The cost of a fulfillment center is not as simple to calculate. Consider the inventory and quantity of orders you plan to store and ship to figure out how much it will cost you.
Before you decide, it’s worth figuring out the details and coming up with an estimate. The analysis will help give you some perspective on whether or not outsourcing fulfillment is in your best interest.