The price your 3PL charges for warehousing, order fulfillment, transportation, and other services has a substantial impact on several points of your supply chain.
The variables are important to note. Some ecommerce businesses just need core fulfillment services. Others need value-adds like inventory management, kitting, custom packaging, international shipping, and demand forecasting.
Whatever your needs are, price transparency is key. Strategically designed 3PL fulfillment pricing should provide predictability to help you to optimize costs, build resilience, and invest in growth.
Here, we’ll discuss how 3PL cost models work and answer common questions about 3PL warehouse costs, fulfillment pricing, shipping costs, and more.
We’ll also share some of the details of our pricing at Red Stag Fulfillment. If you’re interested in getting a customized quote for your ecommerce needs, reach out to us.
Factors in 3PL cost models
Before diving into the various cost models, let’s first focus on the service categories that affect the value of 3PL prices: services, specialization, and scalability.
Services
The range of services you need from a 3PL provider is probably the greatest cost driver, but an experienced 3PL can help you break down cost estimates and efficiencies. Consider how each of these services create value for your business::
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Warehousing Strategically stored inventory supports timely order fulfillment and can help optimize shipping costs by positioning stock near your customers.
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Pick and pack Streamlined pick and pack helps reduce errors and contributes to faster fulfillment, which can boost customer satisfaction.
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Kitting Bundling products for subscriptions or promotions provides your customers with curated offers, helping increase sales and revenue.
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Shipping The ability to negotiate volume discounts across a robust carrier network can increase on-time deliveries, reduce landed cost, and increase profitability.
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Inventory planning Advanced stock optimization can help prevent stockouts, minimize overstock, reduce carrying costs, and inform purchase order decisions.
3PL specialization
Some 3PL providers may offer specialization or solutions to challenging logistics scenarios. For example, shipping large or heavy items can differ from shipping smaller or lightweight items.
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Your 3PL needs a large enough fulfillment center to store big items cost-effectively.
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They need to have special equipment to move heavy items without damages.
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If your customer deliveries are priced by dimensional weight, fulfillment teams need to know how to optimize packaging for cost control.
In this case, your 3PL pricing would reflect the unique costs of specialization. You might pay a higher fulfillment rate per item or tier or, if you have a mix of product types, you might just pay surcharges on certain items.
Scalability
Your 3PL should be able to scale with your growth, increasing services on demand. This matters because if they can’t meet your increased storage needs or order volumes across fulfillment centers, you could lose sales.
The flexibility to expand helps control costs and reduce inefficiencies. You can skip investing in new systems and just continue doing what already works at a higher volume. In fact, you might be able to negotiate volume discounts as you grow, making pricing more favorable.
Features of 3PL cost structures
When comparing 3PL costs, consider your business size, including how many products you sell and how many orders you receive. Depending on your structure and operations, your business may be able to handle more complexity in pricing. Here are a few guidelines to help determine your needs.
3PL fee complexity
If you’re a startup or have limited products, it’s vital to maintain simplicity to preserve the benefits of a streamlined supply chain. This typically means you pay based on the number of items or orders your 3PL fulfills, so that pricing scales with demand.
As you grow, you can add complexity in inventory distribution, packaging, and transportation to reflect customer demands. For example, if you wanted to launch a new sales channel, you might consolidate inventory as part of an omnichannel fulfillment strategy. You might provide your fulfillment center with additional branded packaging materials and require new carrier routes to deliver packages to customers.
The increase in activities might change how services are priced, moving you into tiered pricing to accommodate fluctuating volumes or enabling carrier negotiations based on volume.
Transparency in 3PL rates
Whether your supply chain is simple or complex, transparency keeps costs under control. Look for exact cost figures attached to specific services, but keep in mind that prices can change.
You can ask your 3PL how they handle communication around topics that could impact cost, like regulatory changes, equipment shortages, labor disruptions, inflation, and carrier rate increases.
Some of these matters may be out of your 3PL’s control. The important thing is that they can help you optimize pricing based on a clear, shared understanding of market conditions and service value.
Guarantees
Guarantees can go a long way in protecting you from financial loss or waste. That’s because there are many ways mistakes can increase fulfillment costs and offset other pricing advantages.
For example, damages and delays can eat up capital investments and profits. Even upstream errors should be caught at the warehouse dock door or while logging stock into inventory. These issues can offset or negate pricing advantages, but when your 3PL offers guarantees, it helps preserve those advantages.
How much does a 3PL cost?
3PL costs are either fixed or variable, meaning they apply no matter how much you sell, or they scale against services you need to fulfill orders.
Let’s look at which 3PL price model may be best for you.
Understanding 3PL fees and rates
Typically, there are three main options to determine how much a 3PL costs. They are transactional, tiered, and all-inclusive pricing. These costs don’t include carrier costs, which are not controlled by your 3PL.
It’s also worth noting that some 3PLs may combine pricing structures in certain circumstances. This may let everyone optimize costs while keeping service levels high.
By transaction
When you pay per transaction, you can scale your 3PL costs against your supply chain activity. This helps prevent overpaying for services you don’t need and helps you maintain predictability of profit margins.
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Per order: Cost reflects activities to fulfill an order, including picking and packing.
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Per unit: Cost reflects the number of items fulfilled and may also apply to kitting.
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Per mile: If your 3PL provides transportation for certain legs, they may include fees based on distance as stand-alone or add-on charges.
Since transactional costs may still have additional variability, it can help to connect with your 3PL for a quote or estimate.
By tier
Tiered pricing structures offer flexibility based on the volume or complexity of services. As your business grows or requires more intricate fulfillment processes, different tiers accommodate these changing needs.
This approach may be best for high-volume ecommerce companies with many SKUs. It allows for a tailored yet streamlined cost structure that lets you focus on growth.
All-inclusive 3PL prices
All-inclusive pricing provides a comprehensive package covering a wide range of services. This simplified approach offers transparency and predictability, combining various supply chain and fulfillment costs into a single, fixed fee.
Businesses benefit from a clear cost figure, making financial planning more straightforward. All-inclusive prices may initially seem higher, but you may realize greater cost savings in the long run, especially for companies with diverse or complex fulfillment requirements.
How much does Red Stag Fulfillment cost?
The short answer is: it depends. We take a consultative approach with every client, crafting a customized agreement that delivers exactly what’s needed and nothing more. But here’s a little generarl info that might be helpful.
Red Stag’s pricing is designed for cost efficiency, reflecting high-value services with exceptional accuracy rates and proactive optimization of landed costs. We offer clear, transparent pricing models for a wide variety of services.
Our strategic inland warehouse locations let you optimize storage space and carrying and transportation costs, eliminating the high prices and costly bottlenecks of more congested areas.
With order fulfillment centers in Knoxville and Salt Lake City, we can reach 96% of the U.S. within two days or less (and probably at a lower cost that coastal warehouse locations). Fast, accurate shipping helps support customer satisfaction which can also help increase topline revenue and lower customer acquisition costs.
Our guarantees back up our promises. On the rare occasion we make a mistake, we fix it and pay you an additional fee to cover the inconvenience. That removes a lot of your financial risk, so you can keep more of the money you earn.
While mistakes are rare, if we make one, we’ll fix it, cover the costs, and pay you a little something extra to cover the inconvenience:
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$50 for every mis-pack
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$50 for every order we ship late
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$50 if we don’t log your products into inventory within two business days of inbound shipping
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The wholesale cost of items that are lost or damaged on our shelves
No other 3PL has guarantees that come even close to this.
No hidden costs, no hidden fees
Here’s what you never pay for when you work with Red Stag Fulfillment:
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No setup or software fees
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No SKU management fees
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No costs for system integration
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No account management fees
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No other fees we don’t share
Be sure to ask other 3PLs for comprehensive, itemized quotes to compare.
3PL pricing FAQs
What’s the best way to shop for 3PL rates?
You can search online, reach out to 3PLs using email or forms, and discuss needs and service value internally to inform negotiations.
If you work with Red Stag Fulfillment, we have a Rate Shopping feature that allows you to compare shipping cost and speed across carriers.
We also created a guide to help you find the best 3PLs for your needs. You can use it to discover and assess the value of 3PL companies you’re considering.
What does it cost for a 3PL to help me with Amazon?
If you fulfill your own Amazon orders, we can help you meet and exceed Amazon’s good-standing requirements.
If you fill your own Amazon orders with Fulfilled by Merchant or Seller Fulfilled Prime, we help you meet and exceed Amazon’s good-standing requirements.
Support is included in our standard 3PL pricing.
How do I calculate costs for FTL and LTL services?
Create the order within our Operations Portal, and choose one of the available freight options.
We handle preparation and share weight and dimensions. You make the final carrier selection.
All costs associated with these services are covered in your company’s specific 3PL pricing.
How do I figure out international shipping costs?
Different 3PL pricing may apply to international shipments due to changes in shipping costs. For example, prices may vary based on your product classification codes, which determine things like tariffs and regulatory requirements.
How does pricing work for reverse logistics?
We offer returns management for all ecommerce customers. We’ll work with you to determine pricing for value-added services like returns.
Can I streamline costs with my own custom boxes?
We provide access to standard packaging and can incorporate custom materials you provide.
The ability to use custom boxes is included in our standard 3PL pricing.
Do special order instructions change 3PL prices?
You can create packaging instructions in our customer portal for order management and fulfillment.
Instructions typically don’t impact standard 3PL pricing, but we recommend talking to your account representative to ensure orders are filled to your satisfaction at a price that works for you.
Get a quote for 3PL pricing
Want to see prospective totals, cost analyses, and bottom lines for your 3PL pricing? Reach out to Red Stag to get started. Our 30-day trial lets you expand your capabilities with no long-term commitment required.
