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Warehousing Services Costs, Pricing, Rates and Fees

The most frequently asked question we receive from customers is “how much does outsourced warehousing cost“? While it is a complicated answer, back in 2017 we started collecting data from our extensive network of warehousing and best fulfillment companies each year in order to help both businesses and warehouses alike to understand average warehousing pricing and costs. This page is the culmination of many years of work, and includes historical survey results from each of our annual warehousing costs and pricing surveys. With data accumulated from both the US and Canada, the results help companies searching for pricing information for 3PL companies near me or throughout all of North America.

Before we jump into the most recent warehousing costs and pricing survey results from 2022, we want to provide a few important pieces of information to not only navigate the page easier, but also to summarize key data.

First, in order to easily compare some of the shifts in data over the years, we’ve included a small table with key stats from all of our surveys. The table is listed below for easy reference.

Average Warehousing Services Costs, Pricing, Rates and Fees Summarized

Second, since this is a long page with multiple years of data and survey results, we also wanted to include quick links to each year’s survey in order to compare the most recent results to previous years. Below are quick links to each of our previous Annual Surveys (2017-2022):

The Most Recent Results: 2022 Warehousing and Fulfillment Costs & Pricing Survey

This is our fifth year completing the annual Warehouse and Fulfillment Costs and Pricing Survey. We sincerely appreciate everyone who took the time to complete the survey since the information compiled helps give an overview of what is taking place in the warehouse and fulfillment industry.

Warehouse Costs, Pricing, Fees and Rates

Before presenting the results, it is important to note we did not record which answers were associated with a particular warehouse to maintain confidentiality and to allow for in-depth feedback without the risk of divulging important information. We felt this would keep responses open and detailed, which in-turn helps us in being able to provide the best and most detailed feedback.

Second, if any of the answers were extreme or outside the typical parameters, we excluded that data from the averages. For example, if someone indicated they paid $125 per square foot per year for warehouse space and the average was $10 per square foot, we excluded that response. However, we did include additional feedback assuming it didn’t create a significant change to the results.

Next, we did not segregate the results by geography. We do understand this can skew the results of the survey since we have vendors in all areas of the United States, Canada, and throughout Europe. However, we felt this would help simplify the survey results. By presenting the information in general terms with distinguishing for geography, this helped streamline the answers for an easier understanding of the findings.

Fourth, we calculated the averages to questions that had multiple formats. For example, if we asked warehouse owners what they pay their management, we may receive inconsistent answers with replies that include both salary and hourly wages. The same is true when answers were given for pick and pack companies pricing for pick and pack per order vs. charges per order or per item fees.

Finally, if there were any responses that warranted further explanation, we elaborated on those answers to allow readers to have a better understanding of that particular information.

Summary of the 2022 Survey Results

To keep the information easier to digest, we categorized the results into 4 categories:

  • Performance Metrics of Warehouses
  • Agreement Terms of Warehouses
  • Warehousing Costs for 3PL Warehouses
  • Pricing and Discounts to Customers

Since each of these areas are important to the overall operation of a warehouse, we feel it was important to look individually at the results to gain a better perspective of how warehouse owners handled their operations.

Although recent obstacles due to Covid-19 are still having their effect on industries, you will notice the results in several areas did not drastically change compared to those changes between 2020 and 2021. However, other areas have been impacted significantly by the events of the last few years, and warehousing companies are definitely challenged to best serve their customers while staying competitive within this highly sought after industry.

You can view some of the high level summary results on our infographic:

2022 3PL Warehouse Costs

Performance Metrics of Warehouses

Our primary objective with performance data is to discover how many fulfillment providers evaluate the quality of their work. We asked providers the following questions:

  • Do you measure performance?
  • What is your order picking accuracy?
  • What percentage of customers do you retain each year?
  • What is your inventory shrinkage rate?
  • If you own multiple warehouses, do you charge the same rate for each location?

The survey revealed that 73.44% of the companies measured their overall performance, which shows the importance of continually trying to improve options and services. We also found that picking accuracy slightly increased to 99.36% from 2021, helping companies remain competitive. Unfortunately, customer retention dropped slightly to 94.54% from 95.67% in 2021, which may indicate that customers are still “shopping around” to find the best fit and price. The inventory shrinkage rate decreased to 1.37%. While this is similar to 2020 levels, it represented a slight improvement. Finally, 60% of those surveyed with multiple warehouses said they charged the same rates for all locations, which is a rather significant increase from last year’s 54%.

Agreement Terms of Warehouses

Standard 3PL contract and agreement terms are important since they outline the terms and arrangements between the warehousing company and the user of the outsourced service. Our survey included the following questions:

  • What terms do you offer with your agreements (month-to-month, annually, multi-year, no term, etc.)?
  • Do you increase your pricing on a regular basis?
  • If you increase your pricing, what percentage do you use for the increase?

This year, 56% of the agreements were month-to-month terms whereas annual terms were only offered by 43.9% of respondents – a drop from last year. Multi-year terms also dropped from 48% to 34.85%, but there was a sizable increase with the “no term” option at 21.21% – up from 9% in 2021. Users of warehousing services want to stay flexible and fluid due to ever-changing circumstances, and warehouses seem to be accommodating these desires by offering more flexible terms.

Not surprisingly, 80% of warehouses increase pricing on a regular basis. The percentage of warehouses that increased pricing annually dropped from 69% in 2020 to 61% in 2021 to 51.61% in 2022.  Only 3% of the companies increased pricing on a semi-annual basis, and 37.10% of the companies increased pricing every two years. Finally, 8.6% of those surveyed increased pricing every five years, no doubt allowing customers to lock into preferred rates for extended terms. Of those surveyed in 2022, those that do adjust rates up do so by an average of around 3.9%.

Warehouse Costs for 3PL Warehouses

The following are questions we asked regarding the costs to operate and maintain their warehouses:

  • What is the yearly cost per square foot of your warehouse space?
  • What is your starting hourly rate of your warehouse staff?
  • What is your annual pay for a warehouse management employee?
  • What is your corporate profit?

The average costs per square foot of warehouse space in 2022 was $7.96. Over the last year, the average wage for an hourly warehouse employee increased less than $1 per hour to $14.97, whereas the average annual pay for a warehouse employee dropped by almost 6% to $52,790 per year. The survey also indicated a slight drop in the corporate profit to 10.58%.

We asked a few new questions this year as well:

First, we asked ‘What percentage of your total revenue that is represented by occupancy costs?’ Respondents indicated an average of 25.22%. Second, we asked ‘What percentage of your total revenue is represented by payroll costs?’ The average result was 33.09%. Third, we asked, ‘If you offer a dedicated, single customer facility, what percentage margin do you charge on occupancy costs?’ Survey results were 18.83%, on average.

Warehousing Pricing and Discounts to Customers

What is probably the most useful information to customers is understanding how costs affect them overall when working with a fulfillment center. Pricing can be extremely difficult for customers to understand, oftentimes requiring them to use a fulfillment cost calculator. The survey included interesting results about pricing structure, discounts, and services, providing valuable data as to what is offered and expected.

For Order Fulfillment Pricing, We Asked:

  • What is your average pick and pack price for a single item direct to consumer (B2C) order?
  • What is your average pick and pack price for a business to business (B2B) order?
  • Do you off discounted pick and pack rates?
  • If you offer discounted pick and pack rates, what is the break with which you provide the discount and how much of a discount do you offer?
  • How much do you charge for cartons, inserts, and promotional material?
  • How much do you charge for Amazon FBA orders?
  • How much do you charge for subscription box orders?

The average B2C pick and pack fee remained the same in 2022 at $3.13 per single item while the average B2B pick and pack fee for single item orders slightly increased to $4.33. In 2022, only 64.29% of those surveyed offered a discounted pick and pack rate, which is a decrease of approximately 7% from the previous year. The volume at which discounts applied was an average of 2,348 orders per month; the lowest volume discount was 500 orders per month and the highest volume discount was 5,000 orders per month. The average discount was around 6.5% and ranged from 2-10%. Fully half of the warehouses surveyed indicated they require monthly minimums for customers. In terms of dollar amounts, the average monthly minimum was $740.79. In terms of orders per month, the average monthly minimum was 250 orders per month.

Regarding packaging, the survey showed that more than 70% of the warehouses did not include cartons in their pick and pack fees – meaning that customers pay for the carton in addition to the pick and pack fee per order. The average cost per carton ranged from $.80 for a small carton to $1.61 for a larger carton. The typical mark-up over cost for cartons was 11.25%.

When inserts or other promotional items were required in the cartons, warehouses charged approximately $0.23 per insert. This was almost double compared to 2021’s average fee. For orders that required shrink wrapping, the average fee was $37 per hour or $5.50 per pallet.

Similar to previous years’ surveys, 80% of companies charged the same price per order for Amazon orders. Of those who did charge differently for Amazon orders, the average price was $0.56 per label or $0.20 per SKU and additional fees of $1.50-3.00 per order. Some warehouses simply charge an hourly rate of $30-45 for additional Amazon work.

As for subscription boxes, 85% of those surveyed charged the same rates as with normal orders.

For Warehouse Storage Pricing, We Asked:

  • How do you charge your customers for storage?
  • What is your average price for storage?
  • How much do you charge for climate-controlled, cold storage, or frozen storage?
  • Do you offer discounted storage fees?
  • If you offer discounted storage fees, what is the break with which you provide the discount and how much of a discount do you offer?

It shouldn’t come as a surprise that the most common storage fee was pallet storage pricing by 86.15% of the responses; however, this is a 7% drop from 2021. Other storage pricing modalities are being evaluated by the market. The second most common storage pricing structure was for storage by bins at 44.62%, followed by 18.46% charging per cubic foot, 16.92% charging per square foot, and 3.08% charging by other means. The average cost for pallet storage was $0.91 per square foot, $0.50 per cubic foot, $3.18 for bin storage, and $16.21 per pallet.

For public warehousing companies offering climate-controlled, cold storage, or frozen storage, the storage costs within these environments were $19.81 per pallet and $0.71 per cubic foot on average.

Overall, 38.71% of those surveyed offered a discounted storage rate ranging from 2-12% (with the average being 9.86%). The average discount break for pallets ranged from 100-2,000.

For Shipping Pricing and Discounts, We Asked:

  • How do you charge for shipping?
  • Do you offer shipping discounts? If yes, what discount do you give for ground, express, international, and LTL shipping?
  • Do you let customers use their own freight accounts?
  • Do you have Commercial Plus Pricing with USPS?

Our survey found that warehouses continued to use and evaluate a variety of ways to charge for shipping services. Slightly over 68% of warehouses offered a cost-plus model which continues to be the most popular shipping method. The second most common shipping method was allowing customers to use their own freight accounts. The other options included 19.70% of warehouses offering a discount off published rates, 6.06% of the warehouses not offering a discount, and 3.30% of the warehouses handling discounts by other methods. The average shipping discount for ground was 21.82%, 26.40% for express, 24.71% for international, and 57.30% for LTL services. On average, the mark-up on ground shipments was 18.7% with a 20.8% mark-up for express shipping, 18.11% for international shipping, and 21.9% for LTL shipments.

In 2021, around 75% of the warehouses surveyed allowed customers to use their own freight accounts. In 2022, that result increased to 90.63% of warehouses allowing customers to use their own freight accounts. Most warehouses did not charge additionally for customers using their own freight accounts, but for those warehouses that charged for allowing customers to use their own customer accounts, the additional fee ranged from $0.50 – $0.95 per order.

Finally, we found that 63.49% of the warehouses had Commercial Plus Pricing with USPS to help customers achieve aggressive and competitive USPS rates.

For Set-Up/Account Management/Receiving/Returns Fees, We Asked:

  • Do you charge a routine account management fee? If yes, how much and how frequently?
  • If you charge a set-up fee for a new client, how much do you charge on average?
  • How much do you charge for call center service?
  • Do you charge receiving fees? If yes, how much?
  • Do you charge return fees? If so, how much?
  • How much do you charge for kitting services?
  • How much do you charge for shipping cart integrations?
  • What software do you use?

Just over half of the warehouses surveyed reported they did charge a set-up fee ranging from $150-1,500. The average set-up fee was $368. Most of that cost ($274) was attributed to cart integration. More than half of the responses indicated they charged an account management fee ranging from $30-500 per month or $61.67 per hour. The average account management fee per month was $198.93.  And, when customers needed to utilize call center services, the average fee was $1.43 per minute.

Almost all warehouses (89%) charged a receiving fee which was approximately 6% lower than last year’s survey results. On average, the receiving fees were: $2.50 per SKU, $7.37 per pallet, $39.53 per hour, $396.88 per container, and $2.46 per carton. In addition to the fees mentioned, some warehouses charged an additional $0.43 per item. With respect to returns, 89% of warehouses charged for returns with the average fee being $3.62 per order for a single item return. However,  many warehouses charged the same fee as originally charged with the outbound pick and pack order fee.

When we surveyed for kitting services, we found that most companies charged an hourly rate of $39.60 per hour or $0.25-0.50 per unit for single kits depending on the circumstances. The hourly rate was higher than a year ago but the per unit rate was approximately 15% lower than 2021’s results.

Finally, we asked a new question this year regarding what software programs warehouses were using. The most popular response at 29% was 3PL Central. Custom-built WMS systems and Ship Edge were used by 16%, Ship station at 7%, Veracore at 5%, and Camelot at 4%.

We know this is a lot of information to digest, but we felt these results would give an overall insight of how warehouses are handling different areas of their services and what is consistent in the industry. We do understand that we cannot cover every aspect of warehousing and fulfillment so if you feel there is additional criteria you’d find helpful, please let us know so we can take that into consideration for our 2022 survey.

insightQuote’s 2021 Warehousing Cost Survey Reveals Expected Increases as Pandemic Fuels Fulfillment Industry Growth

Each year, insightQuote conducts a warehousing cost and pricing survey, and we now have our results in from our survey concluded for 2021. Some incredible insights came out of this venture that we would like to share with the world. Before we get to that, we need to be clear about some of the assumptions that this survey makes so that people will understand how we tabulated the results that we received and what they mean in context.

2021 insightQuote Warehousing Costs and Pricing Survey

Our Methodology for the 2021 Survey

The data that we collected was not connected back to the specific warehouse that answered the question. In other words, the answers were anonymous so that all participants felt that they could give their most truthful and honest answers. We were also careful to note any extreme answers that were far outside the bounds of the averages. This helps weed out the wildly high or low answers from the survey that might otherwise skew the data. Our goal in doing this was to try to find the most accurate averages in order to provide useful data to our readers.

There was no attempt made on our part to separate out the data based on geographic location for these summary results. Obviously, labor costs and warehouse lease rates will differ based upon location. However, we wanted to find the natural averages as they presented themselves through different areas, and thus we left in all data and did not attempt to segregate it based on geographic region.

Finally, we attempted to standardize answers as best as possible across the different questions. This means that if a survey taker gave more than one answer to a question, we attempted to figure out which answer fit in best with the standard answers given across the board for other questions.

Summary of the 2021 Results

We are so exciting to share some of the results that we obtained from our survey and would like to break it down into a few parts to make it more digestible and useful to everyone. The areas covered include:

  • Performance Metrics of Warehouses
  • Agreement Terms of Warehouses
  • Warehousing Costs for the 3PL Warehouse
  • Pricing And Discounts to Customers

Each of these pieces is important to the overall operation of a warehouse, and this is why it was so important to look at these criteria individually and see how various warehouse operators or owners were doing with their operations.

The last few years have seen consistent growth in the Fulfillment Industry, as more and more retailers move to online sales channels and away from traditional brick-and-mortar operations. But the Coronavirus pandemic seems to have accelerated the growth in online and e-commerce sales, in what seems to be additional movement in consumer behavior. As consumers transition to even more online ordering, the fulfillment industry has been the beneficiary of growth, providing businesses with the means to store and ship online orders.

This shift over the last year, as a result of Covid-19, has put fulfillment and warehouse operators in the driver’s seat in terms of commanding higher prices for their services, which is reflected in our survey results. But the growth of the industry is also continuing to put pressure on warehouse operators’ cost structures – particularly labor rates and warehouse lease costs. As warehousing and fulfillment providers expand and utilize more warehouse space, leasing costs are rising due to limited supply. Furthermore, finding and keeping full-time staff is increasingly difficult, putting an upward pressure on overall warehouse wages.

Below is a summary of the results of our 2021 survey, followed by a compete breakdown of all of the results.

2021 insightQuote Warehouse Cost and Pricing Survey

Performance Metrics of Warehouses

How many warehouse owners/operators are actively measuring the performance of their warehouse? This and other performance related metrics were surveyed in our annual poll. Below are the specific questions we posed related to performance metrics:

  1. If you own multiple warehouses, do you charge the same for each location?
  2. What percentage of customers do you retain each year?
  3. Do you measure performance?
  4. What is your picking accuracy?
  5. What is your inventory shrinkage rate?

Our survey showed that a very high percentage are actively measuring various metrics. Eighty-six percent of those surveyed answered in the affirmative when asked if they were measuring performance. We also found that order picking accuracy came in at 99.21% and inventory shrinkage measured at 1.85%. The order picking accuracy number is both high and not entirely surprising. Warehouses must maintain these incredibly high levels of accuracy if they are to remain competitive in the current landscape.

These accuracy figures and other high efficiency standards have made it possible for warehouses to retain 95.67% of their customers year-over-year on average according to our surveys. Lastly, 46% of companies surveyed that had multiple locations indicated that they charged the same rates to clients across all locations, whereas 54% of multiple-location warehousing companies varied their rate structures depending upon the location.

Agreement Terms of Warehouses

Agreements are an important part of outsourced warehousing – they dictate the terms and arrangements between the warehousing company and the user of the outsourced service. Fulfillment centers use varying strategies related to agreement terms, including the time horizon of the agreement, the amount and timing of price increases, and even who covers errors and inventory losses. Below are the questions that we asked in our annual survey related to agreement terms:

  1. What terms do you offer on your agreements (e.g., month-to-month, annually, multi-year, no-term, etc.)?
  2. Do you increase your pricing on a regular basis?
  3. If you do increase your pricing, what percentage do you increase pricing?

This year, our warehouses indicated that the annual agreement was the most popular. 57% of respondents indicated that they offer annual terms. This was followed by multi-year terms at 48%, and month-to-month terms at 46%. Only 9% indicated that they offer no term as an option, which was a significant drop from the previous survey (16%). This goes to show that there are still plenty of different ways to do business in this industry.

The percentage of warehouses that increase pricing dropped to 61% this year (down from 69% last year). Furthermore, the average yearly increase jumped to 5.59% per year (up from 3.3% last year). The jump represented a 70% increase.

Warehouse Fees for 3PL Warehouses

Warehousing costs are on the rise, with demand for warehouse space and warehouse labor continuing to increase. On the other hand, due to the popularity of outsourced fulfillment services, corporate profits rose from last year. The following are the questions we asked our warehouses in our survey related to their internal cost structures:

  1. What is your yearly cost per square foot of your warehouse space?
  2. What is your starting hourly rate of your warehouse staff?
  3. What is your annual pay for a warehouse management employee?
  4. What is your corporate profit?

The average wage for a standard warehouse employee in our survey was about $14 per hour. Yearly management salaries came in at an average of $55,854.92 in our survey. Both of these were increases from our 2020 survey ($13.47 per hour for warehouse staff and $52,675 for warehouse management).

Despite these impressive wage offerings, the warehouses have been able to maintain steady profits. The average respondent stated that they had an 11% corporate profit percentage in the last year (a whopping 12% increase over last year’s average of 9.77%). Some are doing better than that number, and this is all true while offering consistently impressive wages to the rank and file and to management.

2021 insightQuote Annual Survey

Pricing And Discounts to Customers

Some of the most fascinating and most useful data to come from our survey had to be in the realm of the warehousing and fulfillment pricing and discounts offered to customers. These are the rates that fulfillment centers offer customers.

For Order Fulfillment Pricing, We Asked:

  1. What is your average pick and pack price for a single item direct to consumer order?
  2. What is your average pick and pack price for a business to business order?
  3. Do you offer discounted pick and pack rates?
  4. How much do you charge for cartons, inserts, and promotional materials?
  5. If you do offer discounted pick and pack rates, what is the break with which you provide the discount and how much of a discount do you offer?
  6. How much do you charge for Amazon FBA orders?
  7. How much do you charge for subscription box orders?

The average B2C pick and pack fee for single item orders was $3.13 (up from $2.96 a year ago) while the average B2B pick and pack fee for single item orders was $4.27 (unchanged from a year ago). This year, 72% of warehouses offered discounted pick and pack rates for high-volume shippers, which is up only slightly from last year. Discounts required monthly order volume ranges from 500-10,000, with an average of 2,500 order per month. The average discount was 6.94% and ranged from 2-10%, depending upon the specific warehouse.

Amazon has only continued to grow, and support of FBA and FBM orders is being offered by more and more fulfillment houses. 40% of the warehouses in our survey charged the same pricing for Amazon orders. For those that didn’t charge the same, the main difference was that some warehouses charged label fees of an average of $.35 per label for Amazon compliance, additional fees for compliance of $1-5 per order and per pallet fees of up to $15 per pallet. We also asked about subscription boxes. 88% charge the same as for normal orders. Those that charged something differently used labor time studies for the most part to determine bulk order processing synergies and any applicable rates.

The warehouses we surveyed continued the trend of last year and applied, on average, a cost plus a 10 – 15% add-on fee for cartons. Only 38% of fulfillment warehouses surveyed roll the carton fees into their pick and pack charges – the remaining 62% charge a separate carton fee per order. Average cost per carton was $1.17 and ranged from $.1-$.5 per carton to $1-2 depending upon the size of the carton. When it comes to adding inserts or other promotional materials, 18% of warehouses didn’t charge any additional fees (up slightly from 17% last year), while the majority of warehouses charged an average of $0.15 per insert (unchanged from last year).

For Warehouse Rates, We Asked:

  1. How do you charge your customers for storage?
  2. What is your average price for storage?
  3. How much do you charge for climate controlled, cold storage, or frozen storage?
  4. Do you offer discounted storage fees?
  5. If you offer discounted storage fees, at what breaks do you offer discounts and what discount is offered?

Not surprisingly, storage fees per ‘pallet’ was the most common way to charge customers for warehousing space, just as it was during last year’s survey. A full 93% of respondents charge per pallet (95% in 2020). This was followed by 30% who charge per bin, 27% who charge per cubic foot, 15% who charge per square foot, and 5% that offer other warehousing storage charge methodologies.

Both per pallet storage fees and per bin storage fees increased year-over-year in our survey. In 2021, respondents indicated that they charged an average of $14.79 per pallet (up from $14.58 per pallet), and $4.07 per bin (up from $3.30 per bin).  Both square footage and cubic footage pricing remained flat at $.75 per square foot, and $.45 per cubic foot. Some warehouses indicated that they are beginning to use storage fees per shelf to accommodate their customer’s needs. The average fee per shelf in 2021 was $5.11. As is usually the case, climate-controlled or cold storage fees are higher, and came in at $17.99 per pallet on average for those who did offer it. It was an average of $0.64 per cubic foot for climate controls.

Warehouses seemed to pull back a bit on their warehouse discounts offered to clients. Almost exactly half (49%) of respondents said that they offered discounted storage rates for customers who had over a certain number of pallets to put into long-term storage, which was down significantly from 62% in 2020. The most common discount was a pallet discount and it was offered out at between 50-100 pallets, on average. The average discount was between 5-10% and as little as 2.5% discount. You can see from these numbers that not every warehouse agrees on how or if to offer discounts to certain customers.

For Shipping Pricing and Discounts, We Asked:

  1. How do you charge for shipping?
  2. If you offer shipping discounts? If so, what discount do you give for ground, express, international, and LTL shipping?
  3. Do you let customers use their own freight accounts?
  4. Do you have Commercial Plus Pricing with the USPS?

Warehouses continue to use a variety of ways to charge for shipping services. 37% of our survey respondents indicated that they offer a discount off of published rates, and 64% offer a cost plus model – by far the most popular method. Surprisingly, 39% allow customers to use their own rates. This is a bit of a shock, considering that many warehouses earn a margin on freight that helps pays the bills – and when customers use their own rate structures that is lost revenue. However, some warehouses may be opting for less headaches managing the freight billing process, which usually happens more frequently due to the carriers requiring payment more quickly. Only 9% of warehouses in our survey offered no discount, which was up slightly from 7% last year. Lastly, 7% indicated that they offer another structure altogether.

For warehouses that do use shipping discounts, the average ground shipping service discount was 19.28% off published rates (with 15.5% markup over cost). For express shipping services, the average discount was 25.06% (with 15.62% markup over cost). For international shipping services, the average discount was 24.18% (with 16.25% markup over cost). For LTL shipping services, the average discount was 56.40% (with 15.62% markup over cost). These discounts offer warehousing customers a tangible cost savings by outsourcing in most cases.

We also asked warehouses whether they allowed customers to use their own freight account. Only 75% of warehouses surveyed allow customers to use their own accounts, down from 91% last year. For those that allow customer freight accounts, the average fee was an additional $1.54 for those that did charge additional, and it ranged from $.50 to $5.00 additional per order, or $10-$25 per pallet for LTL shipments. Also, we found that the majority (71%) of warehouses have Commercial Plus Pricing with USPS, which helps outsourced warehousing customers achieve better USPS rates.

For Set Up, Account Management, Receiving, and Returns Fees, We Asked:

While these ancillary fees won’t make up a large part of an outsourced fulfillment services monthly invoice, they are important to note. The following were the questions we asked related to set up fees, account management fees, receiving fees, and returns fees:

  • Do you charge a routine account management fee, and if so, how much and how frequently?
  • If you charge a set up fee for a new client, how much do you charge on average?
  • How much do you charge for call center services?
  • Do you charge receiving fees, and if so, how much?
  • Do you charge returns fees, and if so, how much?
  • How much do you charge for kitting services?
  • How much do you charge for shopping cart integrations?

A slight majority of all respondents answered that they do, in fact, charge set up fees (53%). Of those that charged setup fees, the average price was $548.52 and responses ranged from $120 to $1500, depending upon the complexity. A large part of the setup fee is apportioned for integrating with any shopping carts or other online systems with clients. Of the nearly $550 average set up fee, a full $447.14, on average, was devoted to shopping cart of online system integration. Exactly half of our survey respondents charge a routine account management fee, for customer service related to managing the account. The average monthly rate was $160.10, and the ranges were from $75 to $500 per month, depending upon the service level promised.

Returns fees are charged by nearly all of our warehouses in the survey – a full 95%, with the average return fee per order of $5.28. This represents a sharp increase from 2020’s survey result of $4.05. Exactly the same percentage of warehouses (95%) charge a receiving fee. This comes as no surprise, as receiving is one of the most critical parts of the warehouse process. In fact, even those that don’t charge a receiving fee are likely to bake the cost into another aspect of their fee schedule. The average receiving fee charge varied by type. The average hourly charge was $36.09, almost identical to last year’s result. The average charge for a 40-foot container was $441. The receiving fee was charged at $2.58 per SKU on average (range of $2.5 to $10), and the average charge for receiving cartons was up sharply to $2.91, which was up from $1.50 last year (range of $0.5 to $5). In addition, the average per pallet receiving charge was $10.10.

The last fees that we surveyed were kitting services and inbound call center services. For kitting services, most companies use an hourly rate, since each project is unique in the amount of time it takes to perform. The average hourly rate for kitting came in at $35.47; and the average kitting cost per unit was $.30-$.63 for simple projects. Finally, our survey found that call center fees have dropped slightly. This year, they came in at an average of $.85 per minute, down from $1.05 a year ago.

As you can see, there is a lot of variety in how warehouse operations work, but the averages tell the general story of these warehouses. We would love to hear from you and see what additional data may be of interest to you. If you have an interest in warehouse processes and procedures, please contact us for more information.

Sizeable Increases in Warehousing and Fulfillment Costs According to insightQuote’s 2020 Poll

In January 2020, we conducted our annual warehouse costs and pricing survey. This year, our participation numbers continued to grow, and we would like to sincerely thank every warehouse who participated in this year-long survey.

warehouse and fulfillment costs

Before we jump into the results, let’s talk about some of the assumptions we made during the process of the survey. For starters, we didn’t record which answers were associated with which warehouse. This allowed our vendors to remain confidential and gave them the ability to answer in-depth questions without fearing accidentally providing critical information about their competitive practices.

We also excluded any survey answers that were too far outside of the bell curve. For example, if a warehouse indicated that they paid $100 per-square-foot for warehouse space, we would exclude that answer if the bell curve average was $20 per-square-foot. In these cases, we assumed that exceedingly high or low answers to survey questions were due to misunderstandings — not massive price fluctuations. That being said, we still included abnormal figures, as long as those abnormal figures didn’t make a significant change to the bell curve alone.

Third, we didn’t segregate any of the results by geography. The primary reason for this was to simplify the overall architecture of the survey results. However, we do fully acknowledge that removing geography from the equation can skew the results of the survey — since we have vendors operating in the United States, Canada, and across Europe.

Fourth, we computed the averages to questions with multiple-format answers to provide simplification. So, if we asked warehouse owners what they pay their management, we may receive answers that include both salary and hourly wages. Instead of supplying both forms and increasing the complexity (and digestibility) of the answers, we simply calculated hourly into salary and presented salary as the only answer.

Finally, if there were any responses that warranted some further explanation, we elaborate on those responses below. This allows readers of the results to better understand the context and circumstances surrounding the response.

Summary of 2020 Survey Results

Overall, the growth in e-commerce fulfillment, the complexity of same-day returns, and rising warehouse market costs resulted in warehousing costs rising this year. For the first time, we also measured add-on services (e.g., inbound calls, kitting, shopping cart integration, etc.) — which are being utilized by many warehouses to help offset the growing costs of fulfillment. This year’s survey showed an increase in costs across the entire warehouse ecosystem (e.g., leasing costs, employee rates, salaries, etc.), yet the total profitability of warehouses rose significantly. After last year’s decline, warehouses have found their momentum and are gaining significant profit growth — partially fueled by increased customer fees and technology integration.

You can view some of the high level summary results on our infographic:

insightQuote's Warehousing and Fulfillment Pricing and Costs Survey

Performance Data

For questions relating to performance data, our primary objective was to discover how many fulfillment providers leverage performance data to measure and improve their quality-of-work. We asked fulfillment providers the following questions:

  1. If you own multiple warehouses, do you charge the same for each location?
  2. What percentage of customers do you retain each year?
  3. Do you measure performance?
  4. What is your picking accuracy?
  5. What is your inventory shrinkage rate?

We found that 53% of respondents with multiple warehouses have a unique pricing structure for each location, while 47% operate on identical charging structures between all locations. As we continue the trend of year-over-year tech adoption, we saw a rise in the number of fulfillment providers who measure performance (93% vs. last year’s 82.9%).

The overall picking accuracy has also jumped from 99.19% to 99.31% — likely as a result of wider performance measurement adoption. Surprisingly, inventory shrinkage rates jumped from 1.26% last year to 2.84% this year, possibly indicating frictions in performance measurement adoptions. Finally, customer retention rates dropped this year. In 2018, we saw fulfillment providers keeping 99.52% of their customers. This year, that number has dropped to 94.5%. This is likely due to an increase in competition fueled by fulfillment demand.

Agreement Terms

We often get questions surrounding the standard terms of agreement that fulfillment centers utilize from companies and warehouses looking to outsource their fulfillment needs. To help shed light on these questions, we asked participants:

  1. What terms do you offer on your agreements (e.g., month-to-month, annually, multi-year, no-term, etc.)?
  2. Do you increase your pricing on a regular basis?
  3. If you do increase your pricing, what percentage do you increase pricing?

In our survey, we found that 55% of fulfillment providers offer month-to-month agreements, 54% offer annual agreements, 45% offer multi-year agreements, 16% offer no term agreements, and 46% offer multiple types of agreements depending upon needs. Overall, we saw a 21% increase in multi-year agreements and a whopping 33% increase in no term agreements. There was also a slight decrease in both month-to-month agreements (1.8%) and annual agreements (12%).

The number of warehouses that increase pricing on a regular basis also jumped to 69%. That’s a 5% increase from 2018 and a 27% increase from 2017. For those that increase pricing, they do so by an average of 3.3%. Again, that’s a slight decrease from last year’s 3.7%. 92% of warehouses who increase pricing do so annually, while 8% do it every 2 (or more) years.

Warehouse Rates and Fees

Warehouses looking to remain competitive need to understand how much other warehouses are paying to operate and maintain their warehouses. Here are some questions we asked:

  1. Yearly cost per square foot of your warehouse space?
  2. Starting hourly rate of your warehouse staff?
  3. Annual pay for a warehouse management employee?
  4. Corporate profit?

The average yearly cost per square foot of warehouses was $7.81, increasing $0.03 from last year. Additionally, the average starting hourly rate of basic warehouse staff was $13.47. For warehouse managers, the average salary was $52,765 (or $25.37 per hour). Last year’s results stood at $13.32 and $50,524, respectively. Corporate profit rose on average from 7.25% to 9.77%, largely as a result of the the increases in pricing, which are detailed below.

Pricing and Discounts

In addition to fundamental questions about warehouse pricing, we polled warehouses to get deeper insights into their pricing structures, discounts, and additional services. These questions will help warehouses, businesses, and fulfillment providers better understand some of the pricing complexities in the market — including the average fulfillment pricing, costs, and fees.

For Order Fulfillment Pricing, We Asked:

  1. What is your average pick and pack price for a single item direct to consumer order?
  2. What is your average pick and pack price for a business to business order?
  3. Do you offer discounted pick and pack rates?
  4. How much do you charge for cartons, inserts, and promotional materials?
  5. If you do offer discounted pick and pack rates, what is the break with which you provide the discount and how much of a discount do you offer?
  6. How much do you charge for Amazon FBA orders?
  7. How much do you charge for subscription box orders?

The average B2C pick and pack fee for single item orders was $2.96 (up from $2.86 a year ago) while the average B2B pick and pack fee for single item orders was $4.27 (up from $4.17 a year ago). This year, 69% of warehouses offered discounted pick and pack rates for high-volume shippers, which is down 6% from last year. Discounts range from 2 – 10% (with an average of 6.8%), and the average break is at 2,400, with a range of 500 to 20,000.

This year, we also asked warehouses about how they handle Amazon FBA orders. The vast majority of warehouses do not discount for Amazon, and their pricing structure is generally the same (plus $0.2 – $0.5 per SKU label and $.50 per carton label). We also asked about subscription boxes. Usually, the price is the same for subscription boxes, but some warehouses do a mass kitting project at a better rate before charging pick and pack for single item orders.

When it came to cartons, warehouses we surveyed applied cost plus a 10 – 15% add-on fee (overall average was a cost plus 14.5%). A whopping 77% of all warehouses The average cost for materials  was $0.99 on average with a  range of $.25 – $1.50. When it comes to adding inserts or other promotional materials, 17% of warehouses didn’t charge any additional fees, while the majority of warehouses charged an average of $0.17. The methodology behind inserts ranged drastically from warehouse-to-warehouse, with many offering free initial inserts with charges for each additional insert.

For Storage Pricing, We Asked:

  1. How do you charge your customers for storage?
  2. What is your average price for storage?
  3. Do you offer discounted storage fees?
  4. If you offer discounted storage fees, at what breaks do you offer discounts and what discount is offered?

By far, the most common was of charging for storage was via pallet storage (95% — which is a 5% increase from last year). This was followed by cubic foot (31%), square foot (27%), per bin (25%), and other (4%). 53% of surveyed warehouses used multiple storage charging methods.

The price for each storage method (besides per bin) also increased this year. Pallet storage is up to $14.58 (up from $13.20 last year) per pallet. Per bin storage is up to $3.3 (up from $2.85 last year) per bin. Square foot storage is up to $0.77 (up from $0.66 last year) per square foot, and cubic foot storage remained unchanged at $0.495. We also asked warehouses what they charge for climate-controlled storage, with the average premium at 173% over the base storage fee (anywhere from $16 – $23 per pallet).

The number of warehouses offering storage discounts is up to 62% this year, a remarkable 29% increase from last year. This discount was applied at an average of 420 pallets, with the majority of warehouses offering the discount at breaks of 100 to 500 pallets. The average discount range was 2 – 15%, and the average discount was 7%. Some provide discounts for double stacking pallets, and some discount storage if order volumes increase.

We Surveyed the Warehouses About Their Shipping Pricing and Discounts. Questions Included:

storage and pallet fees

  1. How do you charge for shipping?
  2. If you offer shipping discounts? If so, what discount do you give for ground, express, international, and LTL shipping?
  3. Do you let customers use their own freight accounts?
  4. Do you have Commercial Plus Pricing with the USPS?

With regards to shipping and pricing, we found that warehouses offer a variety of approaches (and 23% offer more than one approach).  32% of warehouses offer discounts off of the published rates, 45% offer cost-plus, 7% offer no discounts, 36% allow customers to use their own rates, and 9% exist in the “other” category.

For warehouses that do use shipping discounts, the average ground shipping service discount was 13% off published rates (with 12.5% markup over cost). For express shipping services, the average discount was 20% (with 12% markup over cost). For international shipping services, the average discount was 11% (with 12% markup over cost). For LTL shipping services, the average discount was 57% (with 15% markup over cost).

We also asked warehouses whether they allowed customers to use their own freight account. A massive 91% of warehouses allow customers to use their own accounts, while 9% do not. For those that allow customer freight accounts, the majority don’t charge additional shipping processing fees (68%), but the average charge for those who do is $1.59 (range of $0.5 to $2 on average). Also, we found that the majority (64%) of warehouses have Commercial Plus Pricing with USPS.

Set Up, Account Management, Receiving, and Returns Fees

Like in our 2018/2019 survey, we asked questions about some of the other ancillary fees fulfillment companies charge. In addition, we asked about some new services such as shopping cart integrations, kitting services for subscription boxes, and call center services. As these additional profit streams continue to grow, we’ll continue to add new questions to our surveys in the future to ensure that fulfillment centers, warehouses, and businesses understand the global optics of fulfillment profits.

We asked questions like:

  • Do you charge a routine account management fee, and if so, how much and how frequently?
  • If you charge a set up fee for a new client, how much do you charge on average?
  • How much do you charge for call center services?
  • Do you charge receiving fees, and if so, how much?
  • Do you charge returns fees, and if so, how much?
  • How much do you charge for kitting services?
  • How much do you charge for shopping cart integrations?

The majority (56%) charge for setup fees. The fees vary from client-to-client, but the average was $520 (with a wide range of 0 to $5,000). This is up from last year’s $336 average setup fee. This year, we also asked about online shopping cart integration. The average charge for a one-time shopping cart integration was $156 (or a $75 average monthly fee).

Conclusion

This year, only a small majority (51%) of companies are charging routine account management fees (down 9% from last year). For those that do charge return fees, the average was $130. A whopping 91% of all fulfillment respondents charge for returns, which is a 7% increase over last year. The average return charge was $4.05, and 11% charged the same amount as their regular pick and pack fee. The majority of warehouses (84%) charged receiving fees, though this is down 11% from last year. The average receiving fee charge varied by type. The average hourly charge was $35.30. The average charge for a 20-foot container was $330. The average charge for a 40-foot container was $465. The receiving fee was charged at $6.3 per SKU on average (range of $2.5 to $10), and the average charge for cartons was $1.50 (range of $0.5 to $5). In addition, the average per pallet charge was $7.65 with a range of $4 – $12.

This year, we dove deeper into some of the additional revenue streams like kitting and inbound call services. The average cost for kitting was $35.75 per hour ($0.20 per unit for simple projects). For inbound call services, the average was $1.05 per minute with a range of $0.75 to $1.25.

Warehousing and Fulfillment Fees Rise According to Latest insightQuote Survey in 2018 & 2019

In December 2018 and through January 2019, we conducted our annual warehouse costs and pricing survey. This year, we polled around 600 warehousing companies and had even more participation than in 2017, and we’d like to thank everyone that took the time to fill out the confidential survey. Each response came from one of the top 3PL companies or best fulfillment companies in the US or Canada.

2019 WNF Warehose Survey

Before we launch into the results, it’s important to point out some of our assumptions. First, we did not record which answer was associated with a particular warehouse. This was done to allow vendors to confidentially answer questions without fear of providing key information about their specific company. Second, if we found any of the survey answers to fall far outside of the extremes, we did not include the results in the averages outlined below. For example, if someone indicated that they paid $75 per square foot per year for warehouse space and the next highest amount was $18, we did not include the result so that we could accommodate for any order entry errors. Unreasonably high or low answers to our survey questions could have been a result of misunderstandings related to the question or an error in entry. Third, we did not segregate the results by geography. We acknowledge that this definitely has a tendency of skewing some of the results, as we do have vendors that operate in the United States and Canada. Fourth, in cases where results were given in various formats for a single question, we made our best attempt to compute averages based upon the most common answer type given. As an example, some respondents answered that they pay a warehouse management employee a salary, while others indicated that they paid an hourly salary. Similarly, some respondents provided answers to how much they charge for pick and pack per order as a flat order fee, while others responded that they charge a per order plus a per item fee. Finally, if there were any responses that warranted further explanation, we elaborated on those responses in our discussion below, so that readers of the results can understand the various responses received.

Summary of 2018/2019 Survey Results

Overall, the hot fulfillment and warehousing market, bolstered by e-commerce fulfillment growth and increased demand for timely processing of internet-driven orders, seems to have caused warehousing costs (mainly warehouse leases and labor related costs) to rise. As a result, the end of 2018 and beginning of 2019 has seen an increase in warehousing and fulfillment pricing for outsourced services. The survey showed that costs rose in all areas for warehouses (warehouse lease costs, hourly employees rates, and management salaried staff), and as a result overall profitability decreased slightly. In order to keep up with rising costs, providers of warehouse and fulfillment services increased their pricing offered to customers across the board as well, including storage fees, pick and pack fees. Furthermore, fulfillment companies opted to extend lower shipping discounts to customers as well.

2019 Warehousing and Fulfillment Pricing and Costs Survey

Below are the results of our latest survey. In order to make the results easier to digest, we’ve segmented them into the following categories:

  • Performance Data
  • Agreement Terms
  • Warehousing Costs
  • Pricing and Discounts

Performance Data

For performance data, our main objective was to see how many fulfillment providers use performance data to gauge the quality of their work. We asked the following questions:

  1. Do you measure performance?
  2. What is your picking accuracy?
  3. What is your inventory shrinkage rate?
  4. What percentage of customers do you retain each year?

In the survey, we found that 82.93% of companies polled measure their performance in some way. The average picking accuracy for order fulfillment companies was 99.19%, and the average inventory shrinkage was 1.26%. Respondents, on average, retained 99.52% of their clients. Performance data results didn’t vary significantly from our 2017 survey.

Agreement Terms

We get a number of questions, both from warehouses as well as companies looking to outsource, about the standard terms of agreement that fulfillment houses employ. In our survey, we asked:

  1. What terms do you offer on your agreements? (month to month, annual, multi-year, or no term) This question allowed warehouses to respond with multiple agreement types, since many firms are flexible and offer different terms to different customers.
  2. Do you increase your pricing on a regular basis?
  3. If you do increase your pricing, what percentage do you increase pricing?

In the survey, we found that 56% offer month-to-month agreements, 61% offer annual agreements, 37% offer multi-year agreements, and 12% don’t require an agreement in all cases. Month-to-month agreements rose slightly in popularity from 10.26% to 12%. More significant, however, were increases in annual and multi-year agreements. The use of annual agreements rose from 38% in 2017 to 61% in 2018/2019, and the use of multi-year agreements rose from 25% to 37% over the same periods. Furthermore, 64.29% of all respondents said they do increase pricing yearly. The rate of price increases nearly doubled – in 2017 the average increase was  2.37% and our latest survey indicated that the average rate increase is now 4%.

Warehousing Costs

It’s helpful for warehousing companies to see what others are paying to maintain their warehouse. In the survey, we asked:

  1. What is your yearly cost per square foot of your warehouse space?
  2. What is your starting hourly rate of your warehouse staff?
  3. What is your annual pay for a warehouse management employee?
  4. What is your corporate profit?

The average cost per square foot of warehouse space was $7.79, a marked increased of $6.53 in 2017. The average starting hourly rate of warehouse staff was $13.32, and the average annual pay for a warehouse management staff was $50.524 (2017 results were $11.44 and $47,478 respectively). The average corporate profit came in at 7.25% for 2018.

Pricing and Discounts

In order to get a feel for the going rates of fulfillment companies, we polled warehouses and asked them questions relating to their pricing and discounts that they offer customers. Not only do warehouses need to understand the competitive landscape, but we also get tons of questions from companies looking for outsourced fulfillment services that are looking to uncover the average fulfillment pricing, costs and fees. For pick and pack fees, we asked:

For order fulfillment pricing, we asked:

  1. What is your average pick and pack price for a single item direct to consumer order?
  2. What is your average pick and pack price for a business to business order?
  3. Do you offer discounted pick and pack rates?
  4. If you do offer discounted pick and pack rates, what is the break with which you offer the discount and how much of a discount do you offer?

The average pick and pack fee for a single item B2C order was $2.86 (up from $2.64 a year ago), whereas the average fee for a B2B order was $4.17 (up from $3.74 a year ago). An overwhelming 74.29% said that they do offer discounted pick and pack fees based upon volume of orders (which was unchanged from 2017), and the average discount was applied at 1,000 orders per month (with the highest frequency of responses either 500 or 1,000 orders per month). Discounts ranged from 5% up to 10%.

We did introduce an additional question in the 2018/2019 survey – ‘Do you charge differently for Amazon orders, and if so by how much?’. We found that 57.14% do in fact charge different for Amazon orders. On average, fulfillment houses charge $1 more for Amazon orders.

For storage pricing, we asked:

  1. How do you charge your customers for storage?
  2. What is your average price for storage?
  3. Do you offer discounted storage fees?
  4. If you offer discounted storage fees, at what breaks do you offer discounts and what discount is offered?

The most common way of charging for storage was pallet storage (90.24% – which was a 10% increase from 2017), followed by storage per bin (26.83%), per square foot (24.39%) and lastly per cubic foot (12.2%). These percentages reflect that companies, in many cases, offer more than just one storage pricing. Warehouses shied away from pricing per cubic foot in 2018 and into 2019.

The average pallet storage fee came increased only slight from $13.02 in 2017 to $13.20 in 2018/2019. The average cubic footage charge was $.5, the average cost per bin was $2.85, and the average cost per square foot was $.66. A full 48.65% of respondents offered discounted storage solutions (mostly at pallet levels), which was largely unchanged from last year’s survey. The average discount was 10% given at roughly 500 pallets.

We surveyed the warehouses about their shipping pricing and discounts. Questions included:

  1. How do you charge for shipping?
  2. If you offer shipping discounts, what discount do you give for ground, express, and LTL shipping?

With regard to shipping pricing, again we found that many companies offered a number of approaches. The most common approach (43.90%) was to allow customers to use their own rates. This was interesting, as many fulfillment providers rely upon making margin on freight. Not far behind, however, was the option of offering a cost plus model, where they mark up their shipping costs (41.46%). About a third of the respondents (31.71%) offer a percentage discount off of published rates, and 14.63% responded that they don’t apply a discount at all. When discounts were offered, the average shipping discount for ground was 20.02%, for express was 29% (both of which were decreases from 2017. 51.33% was the average discount given for LTL freight.

Set Up, Account Management, Receiving, and Returns Fees

In 2018/2019, we expanded our survey to ask questions about other ancillary fees fulfillment companies sometimes charge. The questions included:

  • If you charge a set up fee for a new client, how much do you charge on average?
  • Do you charge a routine account management fee, and if so, how much and how frequently?
  • Do you charge returns fees, and if so how much?
  • Do you charge receiving fees, and if so how much?

The average set up charge was $336, but some companies charge as much as $2,000-$10,000 depending upon the complexity of the integration. 56.41% of companies in our survey indicated that they account management fees, and the average fee was $226.54 per month. 84.62% of those surveyed indicated they charge returns fees and the average charge per single unit return was $3.53 (although some companies charge the same as their standard pick and pack fee OR around $35 per hour). Most companies polled charge a receiving fee (94.87%). Receiving fees varied widely including depending upon the unit of measure: $.25 unit; $7 pallet; $31.95 hour; $373.33 container; $1.21 carton.

Warehousing and Fulfillment 2017 Warehouse Costs and Pricing Survey

In August, we conducted our annual warehouse costs and pricing survey. This year, we had more participation that ever, and we’d like to thank everyone that took the time to fill out the confidential survey.

2017 WNF Warehose Survey

Before we launch into the results, it’s important to point out some of our assumptions. First, we did not record which answer was associated with a particular warehouse. This was done to allow vendors to confidentially answer questions without fear of providing key information about their specific company. Second, if we found any of the survey answers to fall far outside of the extremes, we did not include the results in the averages outlined below. For example, if someone indicated that they paid $75 per square foot per year for warehouse space and the next highest amount was $18, we did not include the result. Unreasonably high or low answers to our survey questions could have been a result of misunderstandings related to the question. Third, we did not segregate the results by geography. We acknowledge that this definitely has a tendency of skewing some of the results, as we do have vendors that operate in the United States, Canada and Europe. Fourth, in cases where results were given in various formats for a single question, we made our best attempt to compute averages based upon the most common answer type given. As an example, some respondents answered that they pay a warehouse management employee a salary, while others indicated that they paid an hourly salary. Similarly, some respondents provided answers to how much they charge for pick and pack per order as a flat order fee, while others responded that they charge a per order plus a per item fee. Finally, if there were any responses that warranted further explanation, we elaborated on those responses in our discussion below, so that readers of the results can understand the various responses received.

Below are the results – we hope that they help you to gauge your costs and pricing versus the average out there in the industry.

In order to make the results easier to digest, we’ve segmented them into the following categories:

  • Performance Data
  • Agreement Terms
  • Warehousing Costs
  • Pricing and Discounts

Performance Data

For performance data, our main objective was to see how many fulfillment providers use performance data to gauge the quality of their work. We asked the following questions:

  1. Do you measure performance?
  2. What is your picking accuracy?
  3. What is your inventory shrinkage rate?
  4. What percentage of customers do you retain each year?

In the survey, we found that 87.18% of companies polled measure their performance in some way. The average picking accuracy for order fulfillment companies was 99.51%, and the average inventory shrinkage was .65%. Respondents, on average, retained 97.82% of their clients.

Agreement Terms

We get a number of questions, both from warehouses as well as prospects, about the standard terms of agreement that fulfillment houses employ. In our survey, we asked:

  1. What terms do you offer on your agreements? (month to month, annual, multi-year, or no term) This question allowed warehouses to respond with multiple agreement types, since many firms are flexible and offer different terms to different customers.
  2. Do you increase your pricing on a regular basis?
  3. If you do increase your pricing, what percentage do you increase pricing?

In the survey, we found that 56.41% offer month-to-month agreements, 38.46% offer annual agreements, 25.64% offer multi-year agreements, and 10.26% don’t require an agreement in all cases. Month-to-month agreements have risen in popularity, as is evidenced by the results. Furthermore, 53.85% of all respondents said they do increase pricing yearly, and the average increase in rates per year was 2.37%.

Warehousing Costs

It’s helpful for warehousing companies to see what others are paying to maintain their warehouse. In the survey, we asked:

  1. What is your yearly cost per square foot of your warehouse space?
  2. What is your starting hourly rate of your warehouse staff?
  3. What is your annual pay for a warehouse management employee?
  4. What is your corporate profit?

The average cost per square foot of warehouse space was $6.53. The average starting hourly rate of warehouse staff was $11.44, and the average annual pay for a warehouse management staff was $47,478. The average corporate profit came in at 8.83%.

Pricing and Discounts

In order to get a feel for the going rates of fulfillment companies, we polled warehouses and asked them questions relating to their pricing and discounts that they offer. For pick and pack fees, we asked:

For order fulfillment pricing, we asked:

  1. What is your average pick and pack price for a single item direct to consumer order?
  2. What is your average pick and pack price for a business to business order?
  3. Do you offer discounted pick and pack rates?
  4. If you do offer discounted pick and pack rates, what is the break with which you offer the discount and how much of a discount do you offer?

The average pick and pack fee for a single item B2C order was $2.64, whereas the average fee for a B2B order was $3.74. A whopping 74.36% said that they do offer discounted pick and pack fees based upon volume of orders, and the average discount was applied at 1,800 orders per month (with the highest frequency of responses in the 1,000 to 2,000 and 5,000 orders per month range. Discounts ranged from 3% up to 10%.

For storage pricing, we asked:

  1. How do you charge your customers for storage?
  2. What is your average price for storage?
  3. Do you offer discounted storage fees?
  4. If you offer discounted storage fees, at what breaks do you offer discounts and what discount is offered?

The most common way of charging for storage was pallet storage (79%), followed by cubic footage (35.9%), per bin (30.77%) and lastly per square foot (23.08%). These percentages reflect that companies, in many cases, offer more than just one storage pricing. The average pallet storage fee came in at $13.02, the average cubic footage charge was $.54, the average cost per bin was $2.14, and the average cost per square foot was $.88. A full 56.41% of respondents offered discounted storage solutions (mostly at pallet levels), and the average discount was 14.17% given at roughly 250 pallets.

Finally, we asked warehouses about their shipping pricing and discounts. Questions included:

  1. How do you charge for shipping?
  2. If you offer shipping discounts, what discount do you give for ground, express, and LTL shipping?

With regard to shipping pricing, again we found that many companies offered a number of approaches. The most common approach (41.03%) was to offer a discount off of published rates. Not far behind, however, was the option of allowing customers to use their own freight account (38.46%). About a third of the respondents (30.77%) offer cost plus pricing, and just over 10% (10.26%) responded that they don’t apply a discount at all. When discounts were offered, the average shipping discount for ground was 24%, for express was 31% and for LTL was 44%.

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