Order Fulfillment Costs: Fulfillment Services Pricing Explained
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This article is part of a larger series on Retail Management.
Third-party order fulfillment companies charge retailers a monthly set of fees based on the services used to fulfill their orders. As a retailer, the total cost owed to your partner fulfillment company mostly breaks down into four fees: inventory receiving, storage, pick and pack, and outbound shipping.
The periodic cost of each of these processes depends on order volume and complexity and product measurements. Additional services and customizations—like branded boxes and item assembly—can also contribute to your fulfillment expenses.
Typical Fulfillment Center Pricing
- Inventory Receiving: $25–$50 per hour (or $5–$15 per pallet)
- Storage: $5–$40 per pallet monthly
- Pick and Pack: $3–$5 per order
- Outbound Shipping: Varies based on size, weight, and destination of your products. This will be your largest expense. Fulfillment companies typically have 10%–50% discounts off standard shipping rates.
Additional fulfillment center costs include a one-time onboarding fee (averages $336–$575), inbound shipping fees, return handling fees, and account management fees (averages $198.93 per month). Services like custom packaging and product kitting or assembly will incur additional costs.
Some retailers choose to fulfill their own orders in-house rather than outsource the task to a third-party company. When it comes to efficiency and cost-effectiveness, this method usually works best for startups and small-scale sellers. Check out our in-house vs outsourced fulfillment comparison to learn more.
Let’s dive deep into how fulfillment services are priced.
How Order Fulfillment Pricing Works
Companies vary greatly in how they structure their fees—some fulfillment partners itemize and quantify each service, while others use flat-rate overall charges. There are also no set industry standards for fulfillment costs, so fulfillment partners often model their pricing to work for a specific type of retailer. Here are some examples (read more about top fulfillment companies in our comparison later in the article):
- Red Stag Fulfillment specializes in working with high-value inventory and fulfilling orders weighing 20 lbs. or more (think furniture or large electronics).
- ShipBob doesn’t have prohibitive order minimums and has a growth plan for new, startup, and small businesses.
- Whitebox charges an all-in-one fulfillment center pricing that covers everything cost center except inventory storage.
On top of the primary fulfillment costs (inventory receiving, storage, pick and pack, and outbound shipping), retailers may also encounter additional fees—including onboarding, inbound shipping, return management, and account management fees. As mentioned above, these charges vary depending on your fulfillment partner and your contract.
Standard Fulfillment Costs
Since our Last Update: Order fulfillment fees have generally increased due to inflation, gas prices, and rising wages.
We looked at two pricing models in the table below to compare average fees for fulfillment services.
Average Fulfillment Costs by Pricing Models
Pricing model 1 | Model 1 price | Pricing model 2 | Model 2 price | |
|---|---|---|---|---|
Onboarding | One-time | $336–$575* | Included | Included in fulfillment fee |
Inbound Shipping | Use their shipping company | Discounted* | Choose your own | Varied |
Receiving | Hourly rate | $39.53* | By unit | $7.37 per pallet OR 25 cents per item OR $2.50 per SKU* |
Storage | By unit | $16.21 per pallet OR 50 cents per cubic foot OR $3.18 per bin* | By cubic foot | 91 cents* |
Pick and Pack Fees | B2C | $3.13 per order* | B2B | $4.33 per order* |
Outbound Shipping | Discounts | 21.82% off of ground, 26.40% off of express, 24.71% off of international and 57.30% off LTL* | Per order | 50 cents–95 cents* |
Return Fees | Per returned order | $3.15 per order + 50 cents per returned item* | Included | Included in pick and pack fee |
Account Management | Monthly | $198.93* | Included | Included in fulfillment fee |
Kitting Fees | Per project per unit | 25 cents–65 cents* | By the hour | $39.60* |
Customer Support Cost | Per month | $100** | By hour | $85.80* |
Standard Packaging | By package | 80 cents per box (varies by size) | Included | Included in pick and pack fee |
Custom Packaging | Purchase package | 10 cents - $10 per box*** | Inserts | 23 cents per insert OR 5 cents per label* |
*Based on a survey by WarehousingAndFulfillment
**Per 6River Systems
***Per ShipBob
Learn more below about each of these fulfillment fees, how they are calculated, and more information on how much you can expect to pay.
When first partnering with a fulfillment company, a sizable amount of setup must be done, including integrating your online store, creating storage infrastructure, and training staff to handle your goods.
This step is often labor-intensive on the provider’s end, so some companies charge a one-time onboarding fee to cover it. The charge ranges from $100 to multiple thousands based on the scale and complexity of your inventory, but small businesses pay an average of $336–$575.
Some fulfillment partners, like the providers listed above, offer service contracts with no initial setup fee.
You’ll pay the freight or container shipping cost to send merchandise from your supplier to your fulfillment center, which varies depending on the quantity, size, weight, and origin of your goods. Many fulfillment partners receive discounted rates negotiated with shipping carriers and extend these savings to you. This can help decrease your inbound shipping costs substantially.
Receiving your stock includes coordinating shipments, plus unloading, inspecting, tagging, and sorting your goods—all of which require lots of time and manpower. For this reason, it’s usually billed by the hour.
Expect to pay about $25–$50 per hour to receive your merchandise—unless your provider charges a flat rate per unit. This cost averages $5–$15 per pallet. For example, Shipmonk and FBA don’t charge for receiving at all, as long as your shipments follow strict guidelines. This is achievable for the companies because their receiving process doesn’t include sorting, counting, labeling, tagging, or cross-checking your goods against the purchase order. These tasks are left up to you and your suppliers.
Storage fees are primarily charged based on the space your inventory takes up. You will also need to pay higher rates for climate control or if your products need extra security. Fulfillment partners charge anywhere from $5–$40 per pallet monthly to store your goods, with the average cost running $16.21 per pallet, according to a survey by WarehousingAndFulfillment.
Some companies calculate this cost using cubic feet (averaging 91 cents per cubic foot) or individual bin occupation instead ($3.18 per bin on average per month).
During peak dates (usually October–December), some providers, namely Fulfillment by Amazon (FBA), will drastically increase their storage costs due to volume and demand fluctuations. It’s not a common factor, but review your contract for seasonal inflation.
If your goods require special services like refrigeration or hazmat handling, storage costs will include a premium of about 73% on average.
Many fulfillment providers bill this process as a fee labeled “fulfillment charges.” It covers the labor of picking items for an order and the materials used to package them.
Often, fulfillment companies charge a flat per-order fee, usually about $3–$5. Some providers refine this cost by using a slightly cheaper base fee and tacking on an item charge per additional unit in the order, such as $2.50 + 50 cents per item. The size and type of packaging material required to ship your goods safely can contribute to the pick and pack cost as well.
Fulfillment companies usually offer great flexibility when it comes to the shipping process, but you should expect the associated fee to be one of the largest on your monthly invoice.
As a retail partner, you can use your own carrier or go through the company’s preferred service. Though each option comes with benefits, it’s important to keep in mind the deep discounts offered to fulfillment providers due to the massive volumes that they regularly ship. If you choose to go with the fulfillment company’s carrier, you’ll likely see 10%–30% discounts on your standard rates.
The actual cost of shipping your orders depends on the size, weight, and destination of your goods.
Handling your customers’ unwanted orders is a service that not every fulfillment company offers but is a valuable amenity for most sellers.
Fulfillment providers who have a returns service will incorporate charges for processing and restocking. The total fees are usually charged at about the same rate as the pick and pack step, plus the cost of return shipping. If elevated inspection is required to determine whether returned goods meet your store’s standards, it will likely incur an additional fee.
Some fulfillment providers charge a monthly fee that covers any additional services performed to keep your account functioning smoothly. This involves communicating with you and your suppliers, handling incidentals, updating software, and more.
The cost itself varies substantially based on your business’ size, complexity, and needs, but usually ranges from $30–$1,000 per month, with the average of $200, per WarehousingAndFulfillment. Some providers calculate a flat monthly rate that covers account administration for the length of your contract, while others charge $40–$60 an hour for any tasks involved.
Optional & Add-on Fulfillment Costs
Depending on the specific needs of your business, you may incur additional fulfillment fees, including:
If any of your goods need to be assembled or grouped together into a set ahead of time, fulfillment providers can help. They charge anywhere from $30–$50 per hour for these services, which often breaks down to as little as 50 cents–$1 per kitted unit.
Some fulfillment partners can take care of customer service-related tasks for you, like accepting orders or handling escalations. The cost of this add-on is largely dependent on how the fulfillment company is set up—some centers have large, dedicated teams of customer service reps fluent in multiple languages, whereas others may simply extend their account administration staff into customer care. Call center services averaged $1.43 per minute in 2022.
One of the biggest advantages of using FBA, for example, is that reputable customer service is included in your fulfillment charges.
Your fulfillment partner can help take your branding further by creating tailored packaging elements or custom-printed inserts for your orders. There are a wide host of variables that contribute to the cost of this option, like materials, design labor, and quantity. Others will use the custom packaging that you provide.
ShipBob says branded packaging ranges from 10 cents to $10 per box. Premium packaging sets crafted to promote an extravagant unboxing experience can cost upwards of $30 per order. Plenty of options exist in between those two extremes, such as stickers, printed tissue paper, stylized boxes, and thank-you notes.
Some fulfillment services charge extra for including extra items; ShipMonk, for example, charges 20 cents per promotional insert just to include it in the order.
After all service fees are said and done, order volume is one of the dominant variables in determining ecommerce fulfillment pricing. When working with retailers who receive large quantities of orders, most fulfillment centers offer a significant discount on their services.
Volume discounts are an important factor: WarehousingAndFulfillment reports that 64% of fulfillment companies surveyed offer discounts for fulfillment depending on volume—an average of 6.5% for over 500 orders per month. About 40% give discounts on storage (average 9.86% for over 100 pallets per month).
Fulfillment Contracts & Legal Fees
Ecommerce fulfillment pricing is only part of what you need to consider when hiring a fulfillment service. A fulfillment agreement is a legal contract between you and your fulfillment company that clearly defines the basics—such as fee structure and payment requirements—and less obvious, crucial details like insurance and liability.
Each contract is different, but common considerations include:
- Term Length: The minimum amount of time you agree to pay for and use the company’s services
- Charges: A thorough and explicit description of how your fees will be calculated and how frequently they will be charged
- Annual Price Increases: The anticipated adjustment of your costs to reflect inflation and changes in the provider’s expenses
- Error Rates: The level of accuracy guaranteed by your fulfillment provider
- Claims: An explanation of the procedure used to handle losses and damages
- Insurance: The details of insurance policies held by the fulfillment company, its employees, and its shipping partners as they affect your property
- Arbitration: A section defining how disputes between parties will be handled
Page 1 of a 12-page fulfillment agreement (Source: FulfillmentCompanies.net)
These agreements are usually lengthy and intricate, and the stakes of fulfillment relationships are high—you’re entrusting your valuable merchandise and the loyalty of your customers to a separate enterprise.
For this reason, many retailers choose to hire an attorney to assist them in reviewing the contract before signing. The guidance you’ll need shouldn’t be extensive, but it’s important to factor in the cost of hiring counsel if it’s an amenity you plan to use.
One of the most cost-effective ways to get advice and document review from an experienced attorney is through Upwork.
Some 3PLs offer the opportunity to try their services for a certain period before signing a full-fledged fulfillment agreement. This gives retailers the chance to make sure they’re a good fit for the company’s services and fee structure. For example, Red Stag Fulfillment offers a 30-day risk-free trial and promises to waive all fees if you aren’t satisfied with its performance.
How to Calculate Fulfillment Costs
The only way to accurately calculate fulfillment center costs is to contact the pros themselves. WarehouseFullfillment.com provides a matchmaking service that compares your specific needs to hundreds of prescreened partners—or you can find contact info on the website of any fulfillment center you’re interested in. They’ll be able to provide you with a specialized quote based on the individual details of your business.
Below are some of the companies from our list of best order fulfillment software. You’ll see that cost breakdown also varies by company.
Top Fulfillment Companies Compared
Features |  |  |  |  |  |
|---|---|---|---|---|---|
Onboarding | $0 | $0 | $0* | $0 | $0 |
Inbound Shipping | Discounted rates available | Discounted rates available | Discounted rates available | Discounted rates available | Discounted rates available |
Receiving | $25 first two hours, $40 per man-hour after that | $13.25/pallet | Included in custom, all-in fulfillment fee | $0 when guidelines are met | $0 when guidelines are met |
Storage | $40 per pallet/month, $10 per shelf/month, or $5 per bin/month | $15 per pallet/month, or $2 per bin/month | Prorated per day based on individual bin or pallet usage, cost undisclosed | $25 per pallet/month, or $1–$4 per bin/month | 53 cents–99 cents per cubic foot/month during January–September $1.20–$3.63 per cubic foot/month during October–December |
Pick and Pack | Growth Plan (>400 orders per month) $0 for the first 4 picks, 20 cents per additional item Regular Plan: $5.66–$346.58, depending on dimensions and weight | $2.25–$2.65 for the first pick, 30 cents per additional item | Included in custom, all-in fulfillment fee | $1.80–$3 for the first pick, 35 cents–75 cents additional items per order (Minimum $250/month) | $3.72–$20.70+ per unit for standard-size products (up to 20 lbs.) $8.62–$305.91+ for oversize products (21-150+ lbs.) |
Packaging Materials | Free plain boxes, mailers, tape, and dunnage | Varies per order | Included in custom, all-in fulfillment fee | 15 cents–$2 | Included in fulfillment/pick and pack fee |
Shipping | Discounted rates available with four carrier partners | Discounted rates available with three carrier partners | Included in custom, all-in fulfillment fee | Discounted rates available with six carrier partners | Included in fulfillment/pick and pack fee |
Returns | $3 per order | Varies per order | Included in custom, all-in fulfillment fee | $2 per order + 50 cents per item | Included in fulfillment/pick and pack fee for most items |
Account Management | $0 | $0 | Included in custom, all-in fulfillment fee | Custom | $39.99 per month for Amazon professional seller account Individual sellers can opt to pay 99 cents per item sold |
*It’s widely reported elsewhere online that Whitebox charges a flat, universal fulfillment fee equal to 10% of the client’s sales, plus a $3,000 onboarding charge. The company told us directly that these figures are inaccurate—its fulfillment services are not commission-based, and onboarding is free. That being said, Whitebox has not disclosed to us how it calculates its custom fulfillment fees.
When comparing fulfillment center pricing (or just analyzing your existing fulfillment method’s efficiency), there are some key metrics to look at. Here’s how to run those numbers:
Cost Per Order (CPO): Total fulfillment costs within a time period
(i.e., one month, quarter, or year) ∕ number of orders fulfilled within the same period
Cost as a Percentage of Sales: Total fulfillment costs within a time period
(i.e., one month, quarter, or year) ∕ net sales within the same period ✕ 100
Fulfillment costs comprise a hefty portion of any retailer’s expenses, regardless of how they operate. It’s important to keep in mind the impact fulfillment details have on customer retention and conversion rates. With companies like Amazon shaping high expectations around shipping speed and return policy, having top-notch fulfillment capabilities is necessary now more than ever.
Did You Know?
- Free shipping is a primary driver of online purchases, with up to 75% of shoppers deeming it a necessity. Extra costs may lead customers to abandon their shopping carts.
- Most shoppers will think twice about ordering from a company again after a bad delivery experience. Among all age groups, 86% of Gen Z buyers will not reorder.
- 62% of shoppers expect delivery in three days or less.
Benefits of Outsourcing Fulfillment
The cost of third-party fulfillment may seem high, especially for startups or small-scale sellers that have never had to worry about things like account management fees. When considering hiring a third-party fulfillment company to assist your business, keep these details in mind:
- You have to pay someone to do this: The fees you pay a fulfillment partner represent the cost of facility, staff, incidentals, and other overhead expenses that you’d inevitably incur running an in-house operation. Even if your fulfillment staff is a one-person team (i.e., you), your hourly time is valuable and should be considered in the outlay you’re comparing.
- There are perks: Due to the great volumes they buy and ship, fulfillment companies receive much lower rates on packing materials and shipping costs. Most providers pass these savings on to their clients, creating an effective perk to working with them.
- Your time may be better spent elsewhere: When your daily priority is processing, packing, and shipping orders, important tasks that actually help to grow your business often take a back seat. Outsourcing your fulfillment duties frees up precious time you can redirect to more profitable areas.
- Fulfillment services scale effortlessly: Third-party providers allocate resources as needed, so you never pay for staff and space you’re not using.
As your business grows or as order volume rises during peak seasons, your fulfillment partners can easily and instantly accommodate fluctuations. You’ll never be left with too few resources to handle the holiday craze or too much leftover afterward cutting into your profits.
Bottom Line
Fulfillment costs are a substantial part of any ecommerce store’s overhead expenses. The process itself has a huge impact on customer experience, sales, and overall profit—making effective fulfillment a worthy investment.
Partnering with a fulfillment company is a step toward maximizing efficiency and driving growth. The associated costs are detailed and complex, but the level of personalization those calculations provide means you’re only paying for what you use—which always works to your benefit.
Visit WarehouseFullfillment.com to get matched with a fulfillment company that meets your needs, or read our fulfillment company buyer’s guide to find the best company for your business.
