How do warehouses charge

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How to Calculate Gross Floor Area. How to Calculate Percent Off. To make room for inventory, the majority of these businesses will turn to a warehouse facility. Of course, warehouses come in many sizes, and as such, costs can vary wildly.

Calculating warehouse expenses is not as difficult as it may seem at first, despite acronyms seemingly designed to confuse renters. To determine your monthly or annual cost, you need three numbers:. This includes:. While there are certainly some advantages to purchasing a warehouse, such as equity-building, there are also a lot of risks involved, which is why generally only very large, well-established companies purchase warehouse space.

A fulfillment center typically stores fast-moving products that are frequently shipped out. Their job is to get products to customers or end-users as quickly as possible. Storage by cubic foot can be preferable for many businesses with smaller items.

Fulfillment centers can even store these smaller items in bins for easier picking accessibility, which can lower fulfillment fees. The last option is storage by square foot. Pick and pack warehousing costs are also called fulfillment charges. This terminology refers to the process of picking, packing and shipping items, and is another warehouse cost that is charged per item. The number of SKUs you have, the size of your product, the number of units per order, and the complexity of your packout will impact the overall pricing structure.

Finding the right fulfillment provider for your business is key and knowing every intricate detail of your product and expectations for your end customer will help you make an informed decision. Kitting fees are a type of warehousing cost that are charged when any special projects are performed to prepare items for shipment. An example of this is assembling items in a subscription box or re-ticketing and re-labeling items or cases.

A second aspect of this is light manufacturing, when a fulfillment provider builds out part of the packaging, such as putting together a large box, before shipping orders to the customer.

This type of warehouse cost is typically quoted on a time and cost basis, breaking down the cost per kit and calculating fees based on the number of items that require kitting or light manufacturing. These types of charges are not usually included in basic warehouse costs, so if you need kitting and assembly , be sure to get specific pricing. You need to look out for any hidden fulfillment fees that are difficult to understand, have a lot of fine print or are different than initially advertised.

Determining exactly what fulfillment centers or 3PLs charge for storage, handling, receiving, and any additional services is a must. Knowing your monthly order volume, including the amount of kitting, pick and pack, and assembly you need is very important as well.

This will allow you to be sure you are getting the best deal for your business.