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What is The Pricing Structure For a 3PL
What is The Pricing Structure For a 3PL?
When engaging a Third-Party Logistics (3PL) provider, you'll need to understand a complex pricing scheme often described as "death by a thousand cuts". This article will walk you through the different fees you might encounter and how these compare to handling logistics in-house.
The Core: Fulfillment Fee
At the heart of the 3PL pricing structure is the fulfillment fee, generally composed of a base fee that includes the first item and additional pick fees for further items in the order. As a general rule, you might expect a base fee around $ 2.50 per order with additional items costing about $ 0.30 each. For example, a simple order with two items would incur a fulfillment fee of $ 2.80.
Additional Materials
Fulfillment fees may include the cost of materials such as cardboard, tape, and padding. If these are not included, they will be priced separately. Typically, the 3PL will procure these materials and add a 5% margin on the cost.
Shipping Fees
While FedEx, UPS, or other couriers will charge the 3PL for shipping, the 3PL will charge you. However, they often negotiate significant discounts with these couriers. Although you'll probably pay less than if you approached these couriers directly, 3PLs generally make a margin on these shipping fees. You might want to negotiate transparency on how much margin the 3PL is making on shipping.
Storage and Receiving Fees
3PLs will also charge you for storage, often on a per pallet per month fee. Additionally, receiving fees are common. Unloading a container might cost around $ 100, and smaller shipments could incur fees around $ 50.
Special Projects and Labeling
If you need any special projects done, such as assembling products or attaching components, expect additional fees for these "touch services." Similarly, barcoding may involve a per label fee such as 10 to 20 cents per label.
Overall Cost Structure
Ultimately, the 3PL's business model revolves around labor arbitrage. They aim to pay their staff a certain amount per hour and charge you 1.5 times that rate. Understanding and negotiating each of these fees can help ensure you know where your money is going and possibly save on costs.
Keywords
- 3PL pricing structure
- Fulfillment fee
- Shipping fees
- Storage fees
- Receiving fees
- Labor arbitrage
- Per label fee
FAQ
Q1: What is the average base fulfillment fee when using a 3PL?
A: Typically, the base fulfillment fee is around $ 2.50 per order.
Q2: Are materials like cardboard and tape included in the fulfillment fee?
A: Materials might be included, or they could be priced separately with a 5% procurement margin.
Q3: Do 3PLs make a profit on shipping fees?
A: Yes, 3PLs often negotiate discounts with couriers and make a margin off the shipping fees they charge clients.
Q4: What additional fees can I expect from a 3PL?
A: Besides fulfillment and shipping fees, expect storage fees, receiving fees, special project fees, and per label fees.
Q5: How do 3PLs generally structure their pricing model?
A: The pricing model is based on labor arbitrage, where the 3PL pays their employees a certain amount per hour and charges clients approximately 1.5 times that rate.