Fulfillment Cost Calculator: Compare Your Own Warehouse Cost vs. 3PL to See If Outsourcing Is Right for Your Business

One of the most frequent questions we hear from businesses exploring our site is, “How much do fulfillment companies charge?” Many companies are weighing whether outsourcing fulfillment makes sense financially. While we have covered this topic in detail before, including our pricing guide and how to select the right 3PL fulfillment partner, we have now developed a 3PL Fulfillment Cost Calculator. This tool helps you directly compare your in-house costs of your own warehouse with 3PL pricing, giving you a clear picture of whether outsourcing is a viable option for your business.

When is the Right Time to Outsource Your Fulfillment?

The right time to outsource your fulfillment is when the benefits outweigh the comfort of maintaining control. Whether you’re facing space limitations, unpredictable seasonal demand, or the desire to streamline operations without heavy overhead, outsourcing should be a strategic move that aligns with your business’s evolving needs.

Deciding to outsource can feel like a big step, especially if you’ve been handling operations in-house for a long time. While costs are a major factor, there’s more to consider than just the numbers. Outsourcing brings unique advantages, such as flexibility, access to expertise, and the ability to shift from fixed to variable costs. However, it also involves risks, such as relinquishing control over your processes, similar to handing over your child to a babysitter for the first time. Though letting experienced professionals manage your storage and distribution may provide peace of mind.

Case Study: Performing a Real-Life Fulfillment Cost Analysis Using Our Calculator

To illustrate the decision-making process behind outsourcing fulfillment, we conducted a detailed analysis with Leslie Paradis, a new startup owner. Leslie allowed us to gather real-world data from her business, offering valuable insights into the costs of running fulfillment in-house versus using an outsourced provider.

Analyzing In-House Fulfillment Costs

Leslie started by using our Fulfillment Cost Calculator to identify the full scope of expenses involved in managing her own warehouse. By breaking down each cost category, she gained a comprehensive view of what it would take to operate an in-house fulfillment process. Leslie’s calculations included labor, rent, utilities, insurance, supplies, and software, capturing the essential costs that any startup would encounter.

For Leslie’s business, the numbers quickly added up: $2,000 per month for a warehouse worker, $2,000 for leasing the space, $300 in utilities, $125 in insurance, $250 for supplies, and $289 for software, totaling $4,964 per month. These figures reflect a realistic snapshot of what startups might face when choosing to manage fulfillment internally.

Evaluating 3PL(Outsourced) Fulfillment Costs

Next, Leslie explored the option of outsourcing by gathering estimates from various 3PL providers. This approach allowed her to compare the costs of receiving, order fulfillment, storage, and additional fees like returns processing, customer service, and call support. The estimated monthly cost of outsourcing was $3,911.56, including a one-time setup fee. Without the setup fee, the recurring monthly cost was approximately $3,501.56.

Comparing the Costs and Finding Savings

When comparing both scenarios, Leslie discovered that outsourcing would save her approximately $962.44 per month, and without the setup fee, the savings jumped to $1,462.44. This significant cost reduction demonstrated that, for her 450 monthly orders, using a 3PL provider was a financially viable option.

Conclusion of the Real-Life Case Study

Leslie’s experience highlights the potential savings and operational advantages of outsourcing fulfillment. While the decision to switch is not universal, her case underscores the importance of conducting a thorough cost analysis tailored to the unique needs of your business. By examining both in-house and outsourced options, companies can make more informed decisions, ultimately choosing the path that best supports their growth and operational efficiency.

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