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How Does Storage Pricing Work in a 3PL Warehouse?

There are various pricing methods for storage in 3PL warehousing. Terms such as initial storage, recurring storage, half-month/full-month charges, and others are commonly used.


Written by: Mark Hughes, VP of Domestic Operations at Brown Distribution Centers, LLC

The pricing structures can vary depending on the type of product and its storage requirements. Let’s delve into these options and explore their differences.

  1. Initial storage/Recurring storage- Initial storage fees are incurred upon receipt of goods at the warehouse. This means that storage charges commence as soon as the goods arrive. Recurring storage fees are applied at the beginning of the subsequent month and cover the storage costs for all products held in the warehouse for that calendar month. If the goods remain in storage the following month, recurring storage fees are charged again.
  2. Free time/Anniversary billing—After a certain period, a warehouse might offer a grace period before storage charges begin accruing. Once this grace period ends, initial storage fees are applied. If the product remains in the warehouse beyond the subsequent anniversary date, additional storage charges may accumulate. In many cases, anniversary billing cycles can occur daily, weekly, or monthly.
  3. Half month/Full month- This pricing strategy is widely used in many 3PL warehouses. When a product arrives in the first half of the month (1st-15th), it usually incurs an entire month’s storage charge. On the other hand, if the product arrives in the second half of the month (16th to the end of the month), the customer is typically charged a half-month storage fee. Any product remaining in the warehouse is usually charged storage again on the 1st of the following month, and this pricing covers the entire month.
  4. Weight storage- In some cases, 3PL customers opt for billing based on the weight of their product. In such instances, the customer is usually charged a rate of “X” per short/metric ton.
  5. Price per square foot—Some clients prefer to rent a specific amount of space to ensure they have dedicated space for their products. In this scenario, the 3PL warehouse charges the client “X” per square foot and reserves that designated space for the client’s goods.
  6. Cubic foot storage—This storage pricing model is similar to square footage billing, but charges are calculated per cubic foot instead of square footage.
  7. Bonded storage- Bonded storage pricing in a warehouse refers to the cost of storing goods in a bonded area. A bonded area is a designated space within a warehouse where imported goods are stored under customs control before duties or taxes are paid. The pricing for bonded storage typically includes fees for the physical storage space, handling of the goods, security measures, and any additional services the warehouse provides. The rates for bonded storage can vary depending on factors such as the type of goods, the duration of storage, and the services required by the client.

Overall, storage pricing in a 3PL warehouse encompasses a variety of methods tailored to meet the diverse needs of clients and the nature of their goods.  Each pricing structure offers its advantages and considerations, allowing clients to choose the most suitable option based on factors such as product type, storage duration, and budgetary constraints. The flexibility and range of pricing strategies in 3PL warehousing contribute to efficient and cost-effective storage solutions for businesses across various industries.

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