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April 8, 2022

All You Need to Know about 3PL Costs

Growth
All You Need to Know about 3PL Costs

You’ve started your business and poured your heart into it, expertly learning, growing and scaling your operations. Just like that, your business is expanding and your garage is no longer cutting it as that workspace, construction, and shipping trifecta it once was. Your business deserves more, and at this point, you’ve probably looked into all the pros and cons of working with a 3PL service (although if you haven’t yet, check out our blog here).

As a small business, you shouldn’t be responsible for managing your warehousing, shipping, and logistics. Keep the fulfillment logistics to us (3PL services) and leave the business growth to you. The faster your fulfillment process is, the happier your customers will be.

But everything comes at a cost, and working with a 3PL service is no different. However, working with a 3PL doesn’t have to cost your small business an arm and a leg (...or whatever the company equivalent of that might be). Finding a low cost 3PL service is possible when you know what to look for in terms of hidden fees, undercover costs and more.

How do you figure out that overall cost? We’re glad you asked. We’ll be covering all the different line items associated with fulfillment and what to look out for when it comes to those hidden fees.

3PL Pricing: Things to Consider

Your business deserves a 3PL service that provides fair warehousing costs at the correct scale. You don’t want your business to be tied down to a space that cannot grow with your business in terms of sizing, pricing and more. Along with this, your 3PL must fulfill orders to your company’s standards, with good customer service, up to date technology that supports your business, and bills fairly, above all else.

Oftentimes, many 3PL services consider every single line item when charging their users. Sure, a pricing structure can start at a minimum fee around $250, but this number can quickly jump if your needs and expectations expand with your company. Oftentimes with 3PL services, warehousing, staffing, equipment and systems are provided within the pricing, but not much else.

It is important to consider that sometimes the most cost savvy 3PL services won’t guarantee the standard of service your business will require. Examine what you’re getting at each price point with each 3PL and weigh your options, considering both pricing and fulfillment standards.

Everything in 3PL pricing can and should be negotiated upon getting a prior quote. Provide your potential 3PL’s with all the details about your business and where you plan your business is headed, and the pricing and logistics can be planned from there.

Hidden Costs and Fees to Watch For

We’ve said it once and we’ll say it again, hidden costs can and WILL come up when figuring out pricing for 3PL services. That’s not to say that your pricing can’t be predicted, but it does mean that your costs will range and change depending on your productivity and business success. Breaking down hidden costs is hard, so we’re here to outline the specifics of what you should look for when considering a 3PL service for your growing business.

1. Warehousing Fees

Warehousing is like real estate. You’re paying for pallet slots or a bin on a shelf. Nearly every 3PL service has a standard rate for the square footage your company requires, but pricing can range depending on your product needs and specialty services your business may require. There are a lot of skews in there, meaning that no matter how much inventory you actually have, you’re still paying for the entire space (whether it’s in use or not.) We recommend finding a service that prices out what’s left of your inventory on the shelf, not the POTENTIAL space.

2. Monthly Order Minimums

Order minimums can and will come back to bite your business if you don’t meet your monthly minimum. Often, this fee can be $275 or higher depending on the service you work with. Finding a 3PL that supports your business expansion through its highs and lows means finding a service that offers no monthly order minimums.

3. Set-Up, Penalty and Other Fees

Oftentimes, every little line item is a fee. Whether it’s a start-up fee with your 3PL or hidden costs based on your product offers, customized packaging, and more, many 3PL’s offer costs surrounding additional needs your business may require. Keep an eye on the fine print!

4. Receiving

With every action your business takes, your 3PL should be right there to support you and guarantee your product is taken care of. Many 3PLs charge an hourly fee based on receiving your product, something that should be considered when choosing your 3PL service.

5. Pick and Pack Rates

3PLs work hard to offer the best service when it comes to working with your product and fulfilling customer orders. When it comes to fees, finding a 3PL service that offers a flat rate per order for picking and packing is ideal, as opposed to the typical 3PL that charges based on the number of items per order.

6. Standard Packaging Costs

With no customizations or kitting and standard packaging for your customers, these fees can and SHOULD be free for your business. Look for a 3PL service that offers free standard packaging as part of their base pricing, as opposed to additional fees for all packaging used.

Overall, finding the right 3PL service at the best price is tricky, and can cause enough challenges on it’s own to make the process of finding your service hard. You want to find a company that offers that hands-on service without blowing the budget. That’s why we’re here.

Avoiding all the hidden costs and scary fees that can accumulate as you grow, Saltbox offers a human-centric approach to fulfillment, placing importance on the customer experience to build trust with each member. We want to see your business grow in both size and success, and having the best 3PL to back you up when it comes to inventory standards, fulfillment logistics, and the lot guarantees long term success built for the best.

So yes, working with a 3PL service guarantees the greatest long-term success when it comes to meeting fulfillment logistics and offers YOU time to focus on your business growth. But, working with the RIGHT 3PL guarantees success at the right cost with the perfect team to support you along the way. Learn more about our Workspace and Fulfillment, then book a tour at a location near you!

About Saltbox:

Saltbox is on a mission to enable the modern economy with human-centric logistics that solve the hardest parts of running an ecommerce business. Our purpose-built network of flexible warehouses, fulfillment centers, on-demand labor and other services are powering the ecommerce economy and the next generation of entrepreneurs to launch, grow and scale.