How Does 3PL Pricing Work?

3PL (third-party logistics) is the process of eCommerce businesses outsourcing their fulfilment, and allowing a third-party provider to store their stock, and take care of orders by picking, packing and shipping them to customers. 3PL providers usually offer a range of services such as warehousing, shipping and transportation, distribution, fulfilment and reverse logistics. Your chosen 3PL provider may even offer sales support, inventory management, offering expertise and help with forecasting.

When it comes to pricing for a 3PL, it can be totally dependent on the services you require, the stock you sell and the location/ type of 3PL business you partner with. This blogpost will dive into the main factors which will affect the pricing of your 3PL and things to consider when choosing a 3PL.

Factors That Will Affect the Price

Pricing can be totally dependent on your business and the requirements you have. It is important to be fully transparent with your chosen 3PL when discussing your needs, to ensure there are no hidden costs along the line. The pricing breakdown can include:

• Inventory Boarding

These are the costs of setting up your brand within the 3PL chosen systems. This will include things such as importing SKUs and setting up all of your data on your chosen channels via API integration.

• Storage costs

This is the cost of storing your stock in the 3PL warehouse. These prices may be dependant on warehouse, for example, here at GNOC we charge per CBM (cubic meter). Charging per CBM means you only pay for the space you use.

• Picking costs

This cost is for the process of warehouse workers picking and packing your orders to send to your customers. These are often billed per parcel, but this may differ depending on who you partner with. It is important you have estimates of how much stock you will be selling per month to let your chosen 3PL know this.

• Labelling and packing costs

If you require additional services such as re-labelling or have special packaging requirements, these will come at a cost with your 3PL. This may be charged per parcel or including in a package when you first come to an agreement. These costs will be totally dependant on what your business requires.

• Shipping

You will be charged for the shipment of items from the 3PL warehouse to your customers door. This cost will depend on which shipping services you require. For example, if you need next-day or Saturday delivery this may cost more. Shipping does depend on the zones, item sizes and weight too.

• Reverse Logistics

Items may be returned by your customers, and therefore there will be a fee for this. This fee will cover everything to do with reverse logistics, such as the item being received, the quality check of the product to ensure they can be sold again and being stored back into stock.

How Much Does 3PL Cost?

Typically, there are three main options to determine how much our chosen 3PL may cost, as each 3PL is different in their pricing strategy. It is mainly transactional, tier, and all-inclusive pricing. You should be mindful that these costs don’t include courier costs, (as these are not determined by your 3PL).

Let’s go through these three options:

By Transaction:

When you pay per transaction, this can help prevent your business from overpaying for services that you don’t need and therefore help your profit margins. These can be worked out:

Per order: The cost to fulfil an order, including picking and packing.

Per unit: Cost for the number of items fulfilled.

Per mile: If your 3PL provides transportation to certain areas, they may include fees based on distance as stand-alone or add-on charges.

By Tier:

Tiered pricing will offer flexibility based on the complexity or volume of the services that you require. As your business expands and grows, you may need to invest in more fulfilment processes or need more complex work from your 3PL. This structure allows businesses to focus on growth.

All-inclusive 3PL Prices:

This pricing will provide a package to your business covering a wide range of services. This simplified approach will offer transparency and predictability to your business as it is a single fixed fee to work with. Although you may benefit from a clear cost, as it can make financial planning more straightforward, it can initially be a lot higher than the other prices.

How Much Does GNOC Charge?

Here at GNOC, our pricing is based on the unique requirements of each business. If you get in touch with us to let us know a little about the services you need to help you grow, and we'll work out the most cost-effective way to get you going. Let us know all about your business and the products you sell, as well as any specific requirements you may have. Our standard costs cover inventory onboarding, warehousing and shipping.

Our pricing is fully transparent with no hidden costs, so you know exactly how much your bill will be. Here at GNOC we want to help your business scale and grow, so contact us now to find out more about working together or fill out our contact form now and one of our helpful team members will be in touch.