How much does a 3PL cost, and are the fees worth it?

Third-party logistics (3PL) providers charge ecommerce businesses a variety of fees based on the services they use to fulfill orders. Most of your 3PL costs fall into four categories:

• Receiving inbound shipments
• Warehouse and storage
• Picking and packing
• Outbound shipping expenses

What you pay for each depends on your order volume and your products. Oversized items, refrigerated stock, and anything that needs a climate-controlled environment push handling costs up, as do upgrades such as custom-branded or eco-friendly shipping boxes and kitting (assembling multiple items into one sellable unit). Volume works the other way. The more orders you send a 3PL, the lower your per-item costs generally fall.

Those fees buy more than order handling. A 3PL’s carrier account may get you discounted shipping, and its warehouses add capacity without a lease or new hires. Your team also gets time back to grow your product line and expand into new markets.  However, partnering with a 3PL does come with a cost.

So whether the fees are worth it depends on both sides of the ledger. Compare the 3PL’s fulfillment cost per order with what the same orders cost you to ship in-house, then weigh the difference against what a 3PL frees up: your team’s time, faster shipping to more customers, and room to take on more orders.

What order fulfillment fees cover

Order fulfillment is the primary service your 3PL partner provides. Order fulfillment fees are the expenses you would pay to your logistics partner for services including:

• Receiving your inventory
• Storing your products in their warehouse
• Processing your orders via various shopping cart platforms
• Picking, packing, and shipping
• Processing your returns

The fees vary with your 3PL provider’s pricing model, your order volume, and any additional services you need.

To determine which logistics company is best for your ecommerce business, you’ll want to familiarize yourself with the various pricing models and fulfillment fees that may apply.

Your cost per order

Your fulfillment cost per order is your total monthly 3PL bill divided by the number of orders shipped that month. Pick fees are some of the more prominent fees incurred, and standard pick and pack fees generally start at approximately $0.20 per item. But storage, receiving, and the other fees feed into the same total, so a low pick fee doesn’t guarantee a low cost per order.

To calculate your business’s fulfillment costs per order, you’ll need to contemplate order fulfillment expenses and fees.

3PL pricing models

While most 3PLs use variable models for pricing, some offer other options. When choosing a logistics partner, the pricing model will likely be a significant consideration in your decision.

Flat-rate pricing

Flat-rate plans charge one fixed fee per order, per shipment, or per month instead of a separate rate for each service. That fee covers whatever the contract bundles in, typically storage, fulfillment, and shipping, and sometimes kitting, customer service, and returns. Budgeting gets easier, though if your orders are simple to pick and ship, you may pay more than you would on a variable plan.

Pricing by kit

3PLs often charge an extra fee for compiling kits — picking multiple products and combining them into a single bundle. The complexity of the assembly can have a significant impact on this cost.

Pricing per bin, shelf, or pallet

Pallet storage is generally the most cost-effective option, at approximately $5 to $15 per pallet per month.

If you’d rather pay storage fees by the cubic foot (and your 3PL offers it), expect between $0.30 and $0.55 per cubic foot each month.

Small items may require storage in individual bins to make them more accessible for rapid fulfillment. When this is necessary for your ecommerce business, the cost generally fluctuates between $ 1.00 and $2.50 per month per storage bin required.

Pass-through pricing

With pass-through pricing, the 3PL bills you its carrier and freight costs, either at cost or with an agreed markup, separately from its fulfillment fees. Ask which applies before you sign, since a markup changes your shipping cost on every order.

Typical 3PL service fees

Most logistics companies charge the same types of fees, such as storage and picking, which will vary depending on:

• The 3PL you select
• Their warehouse size and location
• Your ecommerce business’s order volume
• The size and weight of your products
• Any assembly or kitting you require

Across the board, storage and warehousing will generally be your biggest expenditures. While there are overall pricing ranges for the many services 3PLs offer, there are no standardized fees for fulfillment because so many variables must be taken into consideration. This means it’s important to find the 3PL partner and pricing model that works best for your ecommerce business’s specific needs.

Onboarding

When you begin your partnership with a logistics firm, they will likely charge you a one-time onboarding fee, averaging around $550 for small ecommerce businesses.

The typical range starts at around $100 for the smallest ecommerce business, to upwards of several thousand dollars for larger, more complex businesses.

The onboarding charge covers integrating your sales channels with the 3PL’s warehouse management system (WMS), creating the storage infrastructure for your business, and training the staff to handle your orders.

Inbound shipping and receiving

Your logistics company’s fulfillment warehouse manages your inventory from when it first arrives at the warehouse.

Inbound shipping and receiving fees cover the work of getting inbound shipments from the dock into available inventory, including:

• Unloading your stock
• Counting and sorting your inventory
• Entering your items into the WMS
• Placing the items in the warehouse to make them available for picking and packing

Receiving is typically billed either by the hour, at $20 to $50 per hour, or per unit received, at $5 to $15 per pallet or about $0.25 per item. Hourly billing puts the labor cost on you, so an inbound shipment that arrives disorganized costs more to receive.

Storage and warehousing

Your 3PL will charge you for the warehouse space needed to keep your inventory safe until it is shipped to your customer.

Storage costs are typically based on how much space your stock takes up, billed by the pallet, bin, or cubic foot at monthly rates. Because the charge recurs monthly, inventory management feeds straight into your 3PL costs: slow-moving stock keeps billing you for as long as it sits.

Box and packaging

Box and packaging fees are often included in the order fulfillment fee, but oversized boxes or custom packaging, such as eco-friendly or custom-printed mailers, may add $0.25 to $2.00 per shipment.

Pick and pack

Pick and pack fees cover the process of selecting (picking) individual products within the warehouse and packing them for shipment to the customer.

The pick and pack fee (also called the order fulfillment charge) commonly covers both steps plus the standard shipping materials.

Some 3PL providers break these out and charge pick fees, pack fees, and packing materials separately. They’re typically billed either as a flat fee per order or as a base charge per order plus a fee for each item.

For single-item packages, the average price generally runs under $3 for B2C merchants and around $3.75 for B2B.

Label printing and order inserts

Label printing and order inserts are additional fees and may cost $0.10 or more per shipment.

Shipping charges

For outbound shipping, you can usually either use your own carrier account or ship on your 3PL’s carrier account.

Your own account gives you more transparency and control over each carrier rate. Your 3PL’s account may get you discounted shipping, typically 10% to 30%, because the 3PL ships far more volume than you do. If you go that route, ask whether those rates are passed through at cost or marked up.

Either way, shipping costs are calculated on the size and weight of your packages and the distance they travel.

Work orders

Work orders are hourly labor charges for tasks that fall outside your existing fees, such as relabeling mislabeled items or asking warehouse staff to check on something. Because they sit outside the rate card, work orders are where hidden fees tend to show up, so ask for the hourly rate before you sign.

Returns

Return fees cover reverse logistics, the work of accepting and processing customer returns.

Return costs can include return shipping charges and a processing fee of approximately $1 to $3.50 for inspection, restocking, or disposal if necessary.

Account management

Your 3PL may also add a flat account management fee to your monthly bill.

It covers work outside order fulfillment, such as customer service calls and supply chain management.

Expect $75 to $250 per month on a flat rate, or $40 to $60 per hour if it’s billed hourly.

How to calculate fulfillment cost per order

To estimate your fulfillment cost per order, plug your own monthly volumes and the rates from a 3PL’s quote into these formulas:

Total Warehouse Storage Fee = Number of pallets x storage fee per pallet

Total Pick & Pack Fee = (Number of orders per month x Pick & Pack fee per order) + (Number of units per month x Pick & Pack fee per unit)

Total Receiving Fee = Number of units received every month x receiving fee per unit

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Total Monthly Fee = Total Warehouse Storage Fee + Total Pick & Pack Fee + Total Receiving Fee

TOTAL Fee Per Order = Total Monthly Fee ÷ Number of Orders Per Month

These formulas cover the three core warehouse fees. If your 3PL bills other line items separately, such as outbound shipping, packaging, and an account management fee, add their monthly totals to the Total Monthly Fee before you divide.

So is a 3PL worth the cost?

For growing ecommerce businesses, 3PLs can lower order fulfillment costs and improve customer service, as long as the fee structure fits your order profile.

Because inventory, order volume, and complexity vary so much between businesses, the only reliable 3PL pricing is a quote built on your own numbers. Before you request one, pull last quarter’s orders shipped, units received, and average pallets stored. Then run each quote through the formulas above and set the result against your in-house cost per order. Then weigh what’s left over against what you’d gain: hours your team gets back, faster delivery to more customers, and the capacity to grow without building your own warehouse. 

FAQs

How do 3PL costs vary based on different industries or types of products being shipped and stored?

The cost of third-party logistics (3PL) services varies significantly based on industry and the type of products being handled. Industries with specialized products, such as pharmaceuticals or perishable goods, may incur higher costs due to the need for specialized storage and handling requirements.

What specific factors should a business consider when comparing quotes from multiple 3PL providers to ensure they are getting the best value?

Price the same order profile on every quote so the rate cards line up. Then check for monthly minimums. A monthly minimum is a floor on what you’re billed regardless of order volume, so a slow month can cost more than the fees you ran up. Hourly charges such as work orders won’t show in a per-order rate either, so ask for them. After price, compare service level agreements (SLAs), integration with your shopping cart platforms, and the provider’s reputation for reliability as your volume grows.

How can businesses calculate the potential cost savings and ROI from outsourcing logistics to a 3PL compared to handling it in-house?

Start with cost per order. Run the 3PL’s quote through the formulas above, then work out the same figure in-house: your monthly labor, warehousing, and transportation costs, plus any warehouse software, divided by orders shipped. The gap between the two is your direct saving or added cost. For return on investment (ROI), weigh what that number leaves out, such as the capital you won’t tie up in warehouse space and the time your team gets back for core business work.