Warehousing and Fulfillment: Warehouse Costs and Pricing Survey
We have conducted our annual warehouse costs and pricing survey last August. Surprisingly, we had more participation this year as compared to last year. So we are extending our gratitude to everyone who took the time to fill out the confidential survey.
Before presenting the results of the survey, it’s important to point out first some of our assumptions and presumption.
- We did not mention any answer that was associated with a particular warehouse. This was done to allow the vendors to confidently answer questions without any fear of sharing information about their own companies.
- We did not include those answers that fall far outside of the given extremes in the averages of the final results. For instance, if one company indicated that they paid $75 per square foot annually for warehouse space. This kind of answer is not included in the result.
- We also did not segregate the results by geography. The main reason is we want to acknowledge that there is a tendency of skewing some of the results. We have vendors that operate in Europe, the United States and Canada.
- We made our best attempt to compute the averages based upon the most common answer type given. This is done to those results that came from one question in various formats. For example, some respondents indicated that they pay a warehouse management employee a salary whereas others paid an hourly salary. Correspondingly, some respondents answered how much they charge for pick and pack per order as a flat order fee. Whereas, others said that they charge a per-order with an additional per-item fee.
- We elaborated more on those responses that need further explanation so that readers can understand those responses more.
Read further to see the results of our conducted surveys. We hope that this may help you to measure your costs and pricing versus the average cost in the industry. We also break down the results into four categories to make it easier to digest.
- Performance Data
- Agreement Terms
- Warehousing Costs and Pricing
- Pricing and Discounts
Our main objective is to determine how many fulfillment providers use performance data to measure the quality of their work. Below are the following questions we tend to ask:
- Do you measure the performance of your works?
- What is your picking accuracy?
- What is your inventory shrinkage rate?
- What percentage of customers do you retain per year?
In the survey, we found out that 87.18% of our respondents (companies) measure their work performance in some way. For the picking accuracy for order fulfillment companies, the average was 99.51%, while inventory shrinkage got 65%. On average, the respondents retained 97.82% of their clients.
We get a number of questions, solicited both from warehouses and prospects. These questions are about the standard terms of the agreement that fulfillment houses employ. We arrived with three (3) main questions:
- What parameters do you provide on your terms of agreements? (month to month, annually, multi-year, no term) This question allowed every warehouse to respond with multiple agreement types. This is done since every company is flexible and offers different terms to different customers.
- Do you increase your pricing and costs on a regular basis?
- If you do increase your pricing and costs, how much percentage do you add on it?
The results showed that 56.41% is the average percentage for month-to-month agreements while 38.46% offer annual agreements. Whereas multi-year agreements got 25.64%, the remaining 10.26% is for those who don’t require an agreement. Month-to-month agreements got the highest percentage, as seen in the results. Moreover, 53.85% of all the warehouses responded they increase pricing yearly. The average increase in rates per year was 2.37%.
Warehousing Costs and Pricing
It is important to take note of the cost and pricing of every warehousing company. We arrived with these questions:
- What is your corporate profit?
- What is the annual cost per square foot of your warehouse space?
- What is the starting hourly rate of your warehouse employees?
- What is the annual wage for a warehouse management employee?
The average percentage of corporate profit is 8.83%. The average cost per square foot of every warehouse space was $6.53. Whereas the average starting hourly rate of warehouse employees was $11.44. For the annual wage for a warehouse management staff, the average was $47,478.
Pricing and Discounts
To get the rates of fulfillment companies, we made a poll for warehouses. We asked them questions about their pricing and discounts.
For order fulfillment pricing:
- What is your average pick and pack price for an item direct to consumer order?
- What is your average pick and pack price for a business to business order?
- Do you offer discounted rates for pick and pack?
- If you offer discounted pick and pack rates, what is the break with which you offer the discount? How much discount do you offer?
The average pick and pack fee for an item B2C order were $2.64. For the B2B order, the average fee is $3.74. 74.36% of the warehouse said that they offer discounted pick and pack fees based upon the volume of orders. Whereas the average discount was applied at 1,800 orders per month. Lastly, their discount rates ranged from 3% up to 10%.
For storage pricing:
- How do you charge your customers for storage?
- What is the average pricing for storage?
- Do you offer discounted storage fees?
- If you offer discounted storage fees, at what breaks do you offer discounts? What discount is offered?
Pallet storage charging for storage gained the highest percentage, which is 79%. Followed by cubic footage with 35.9%, per bin storage with 30.77% and per square foot with 23.08%. These percentages only reflect that companies mostly offer more than one storage pricing. The average pallet storage fee falls at $13.02, the cubic footage is charged at $.54. Whereas the average cost per bin is $2.14, and per square foot is charged at $.88. On the other hand, 56.41% of warehouse firms offered discounted storage solutions (mostly at pallet levels). Lastly, the average discount was 14.17% given at roughly 250 pallets.
Get an Estimate Today
All Freight Shipping is the leading provider of trucking services in Toronto. As part of our shipping and trucking services, we provide different supply chain solutions in the form of warehousing options. With us, you can expect warehousing services that incorporate a high level of flexibility in terms of pricing, scheduling and freight. We understand the need for comprehensive storage solutions for any shipments and cargo. You can email us at firstname.lastname@example.org for more inquiries. You can also call us at 647-691-5535 or visit our website to get an estimate for your warehousing services.