What Are 3PL Pricing Models and How Do They Work?

Now that you know the many sorts of 3PL providers, you may be wondering how much it costs to hire a 3PL. Third-party logistics pricing is determined by the services you require as well as the breadth of service. The following are some of the elements that impact 3PL pricing:

  • Onboarding: The time it takes to get a 3PL partnership up and running ranges from three to six months, so some businesses charge onboarding fees to provide you with integrated technology to manage order fulfillment services.
  • It’s easy to get caught up in the details of an auction when there are so many parameters. As a general guideline, you should have three bids: one for each type of potential service.
  • Different 3PLs have varying storage costs, which are dependent on the warehouse. You may be charged a cheaper rate for shared storage however you’ll share the fulfillment center with other firms. For storage, you may be charged per item, per bin, per shelf, or per pallet.
  • Picking and packing, on the other hand, are usually not part of 3PL services. Some 3PLs charge a fee for picking each item in orders, while others include it in the overall order fulfillment price. Orders with a specific number of items may be cheaper depending on the firm.
  • It’s common for 3PLs to charge a fee for packaging. Some 3PLs include packing materials in their delivery costs, while others bill you separately. You may have the choice of customizing your packaging, or you may not.
  • Kitting: This term refers to any special arrangements you ask for before delivering orders. The cost varies depending on your specific requirements.
  • Most 3PLs work with shipping carriers to cut costs, so you’ll get deeper discounts. These expenses incorporate things like shipping speed, zones, and package weight.

You should know that most 3PLs provide three pricing models in addition to evaluating these particular expenses. Most 3PLs give three pricing models, as follows:

  1. The total fulfillment cost is the amount it costs to fulfill an order, which includes only receiving, storing, and shipping inventory rather than individual services.
  2. Fulfillment by Amazon (FBA) is a business model in which items are sold on the Amazon marketplace and orders are fulfilled by Amazon. Because Amazon takes a cut of every sale, they may provide discounted fulfillment charges. Some businesses may benefit from this deal, but it comes at a cost for others, who might lose the ability to promote their brand. Amazon also charges annual storage costs for products that haven’t sold.
  3. Pick and Pack: This pricing model is based on individual charges for each item picked and packed, as the name implies. The majority of 3PL companies charge between $0.15 and $5.00 per pick, causing costs to add up quickly with this method.

When selecting a 3PL company, you must consider all factors, including costs. Continue reading to learn more about how to select a 3PL provider.