Ecommerce fulfillment cost per order: How to calculate it?
Do you really know how much fulfillment services cost? Getting products properly delivered to your customers is an essential part of your brand, but cost matters in how much profit you’ll make.
Ecommerce fulfillment costs include setup, receiving and intake, picking and packing, storage, shipping, and management fees. Fulfillment costs can vary per order and depend on the type of item, order complexity, product size and weight, delivery speed, and sales volume.
Credible fulfillment centers are transparent in setting model pricing of their services and charging merchants based on the activities involved. So let's discuss all the aspects and main fees that you need to know in order to fully comprehend the total costs.
Setup fees are based on the volume of products you anticipate to fulfill. Usually, companies charge a flat rate. The initial setup fee starts from $100 and can be as high as $500.
Receiving and intake fees
Receiving and intake fees typically cover the process of receiving a new inventory from your supplier and sorting it at the warehouse. These fees can be charged in two ways:
- Per hour (rates between $15 and $45 per hour)
- Per-unit basis (rates between $5 to $20 per pallet, $25-$55 per order, $.05-$.20 per piece, $1 per box.
Storage fees are related to the space needed to keep your items safe in the warehouse. The price model may vary based on the fulfillment company and your product.
- Per pallet pricing model is the cost-efficient solution with rates between $5 and $20 monthly.
- Per cubic foot of space model is applied when you need to evade ‘empty space’ and ranges from $.30 to $.60 monthly.
- Per bin is used for fast fulfillment and ranges from $1 to $2.50 monthly.
Keep in mind that in some cases fulfillment centers can charge extra money for temperature control or fragile materials.
Pick and pack fees
Pick and pack fees cover product storage, transportation, and shipment packaging. Typically, these fees are a combination of per order fee and per item fee. For instance, a 3PL’s fulfillment center can charge you $2.50 per order and $.20 per item. If a customer orders five items from your ecommerce store, it will cost $3.50 in total.
The majority of companies add the cost of packaging to this price. Some of them may charge packing material fees. Store owners could also pay more if the order goes over the weight limits.
Shipping fees are the costs of sending an item to the customer. To pay for shipping, ecommerce companies can either have their own carrier account or use the fulfillment center’s carrier account.
Shipping fees are quite challenging to calculate as they depend on the product’s size, shipping location, product weight, and speed of delivery.
Kitting fees include the costs of assembling products before shipping. Kitting fees are based on a rate per hour and range between $25 and $55. If it takes two minutes to assemble a product at a $25 hourly rate, it will result in a $1 per product kitting fee.
Account management fees
A number of fulfillment centers also include a fee that is related to management services required for your order fulfillment. The account management fees cover administrative costs such as additional changes to the inventory, service calls, or other operations that exceed the daily operations needed to complete the order.
Account management fees can be charged at a flat rate. In this case, be ready to pay between $80 and $275 monthly. Other fulfillment centers charge between $30 and $50 an hour for management services.
Return fees cover the costs related to checking the product for defects. If an item has defects or does not function properly, the fulfillment center deals with damaged products. These fees are charged at approximately the same cost as fulfillment fees or a little bit higher if additional check-ups are needed.