Key Takeaways
- 3PLs will generally use one of several models for pick-and-pack pricing: per-order + per-item pricing, per-pick pricing, a volume-based rate, a flat fee, or hybrid pricing.
- Packing materials, product weight and size, and SKU count can influence order fulfillment pricing.
- Choosing a trusted, transparent 3PL provider is more important than choosing a 3PL provider with lower fulfillment costs.
Many companies choose a 3PL partner based on a low advertised pick-and-pack cost. It’s completely understandable! The search for the best value is common in logistics operations and business, in general.
However, this short-sighted pursuit not only leads to subpar service but also to hidden charges and surcharges on your first invoice.
A comprehensive understanding of pick-and-pack pricing is crucial for protecting your profit margins and building a scalable fulfillment strategy. It also empowers businesses like yours to make informed decisions when comparing 3PL partners, ensuring the long-term success of your logistics operations. Learn more at CONRI.
What Do Pick-and-Pack Fees Include?
Understanding pick-and-pack pricing starts with understanding what pick-and-pack services actually include. Because the cost per order fulfillment goes beyond just ‘picking’ a product off a shelf and ‘packing’ it into a box for shipping.
- Your Order Is Received: Once a customer places an order, your 3PL provider’s modern warehouse management system generates a ‘picking list’ that details product SKUs, quantities, and their locations in the warehouse.
- Your Items Are Picked: Warehouse staff uses this list to retrieve items from storage. Two common picking methods are:
- Batch Picking – Groups multiple orders together to pull items for all of them in a single pass through the warehouse.
- Zone Picking – The warehouse is divided into zones, and staff retrieve items only from their zone.
- Your Order Is Packed and Sealed: Items are taken to a packing station, where they’re prepared for safe transit. They’re scanned for accuracy, checked against the packing slip, and placed into an appropriately sized box or mailer, along with protective dunnage, packing slips, and/or promotional materials.
- Your Order Is Handed Off to a Carrier: The packaged parcel is handed to a carrier for shipment.
Each of these steps requires time, labor, and materials, which will be reflected in your pick-and-pack cost.
Cost Per Order Fulfillment: How Do 3PLs Structure Pick-and-Pack Pricing?
3PLs generally use one of several models for pricing ecommerce order fulfillment.
1. Per-Order + Per-Item Fee
This is the most common pricing model in the industry. You pay a flat, base fee to cover the overhead of handling the order, such as generating the pick list and walking to the first item’s location. Then, there’s an additional fee for every subsequent item.
This model is best for standard multi-item or single-item orders.
2. Per-Item or Per-Pick Rate
Under this model, you’re charged a flat rate for every item picked, regardless of whether it’s the only item in the package or one of many. Watch out: Pick-and-pack costs can compound quickly with multi-item orders.
3. Tiered/Volume-Based Pick-and-Pack Pricing
Tiered, volume-based pricing lowers your fulfillment costs as your order volume or the number of items per order increases. It usually involves a ‘first pick’ fee plus a lower rate for additional items. This is beneficial for scaling brands.
4. Flat Monthly Fee
Your 3PL charges a flat monthly rate that bundles your pick, pack, storage, and handling into one predictable price. This is best for large enterprise brands with highly predictable order volumes.
5. Hybrid Pricing Model
Your 3PL may also offer a hybrid model that blends per-order and per-item pricing. Take note, because these models can get complex. They’ll require clear Service Level Agreements to avoid any billing confusion.
What Else Drives Pick-and-Pack Pricing?
Your quoted rate is just one part of your pick-and-pack costs. While pricing varies significantly depending on your fulfillment services provider, it can also be driven by SKUs, packaging requirements, value-based services, and other factors.
Packing Materials
You can’t assume that dunnage, such as boxes, poly mailers, and branded inserts, is included in your pick-and-pack pricing. Many 3PLs do not include materials in their quotes, resulting in additional charges on your invoice. This can turn your once-cheap pick-and-pack services into something much higher than expected.
Custom boxes, inserts, and wrapping can also increase your cost per order fulfillment.
The solution: Transparent partners like CONRI will either include standard materials or provide a clear price upfront.
Product Size and Weight
Heavy, oversized items may require two-person handling or specialized boxes, driving up material and handling costs.
Number of SKUs
Some 3PLs may increase pick-and-pack order-fulfillment pricing for higher numbers of diverse SKUs, as they have a larger warehouse footprint and require longer, more complex picking paths. Packaging multi-SKU orders also takes more time and verification, which drives labor costs.
Value-Added Services
Your base fee covers picking and packing of one or multiple SKUs. But value-added processes such as kitting and assembly services are not. These services require additional materials and labor, which drive up your costs.
Remember That Pricing Can Vary
Pick-and-pack pricing is NOT standardized across the industry. Instead, 3PLs calculate based on factors such as picking method and item dimensions.
There may also be additional costs from provider to provider. This can include not only SKU count but also hidden costs such as warehouse travel time, storage surcharges, or even cancellation fees.
Prioritize Transparency Over Lower Fulfillment Costs
Price matters. But transparent order fulfillment pricing is non-negotiable. Prioritize clear, collaborative 3PL providers such as CONRI so you can precisely forecast your margins and scale your operations without worrying about unexpected pick-and-pack costs.
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