Fulfilment Costs & 3PL Pricing Explained: A Complete Guide

Free next-day delivery used to be exceptional. Now it’s what customers expect by default.

This dramatic change has pushed fulfilment from the back room to the boardroom, making it a key factor for eCommerce success. When over 22% of shoppers abandon their carts because shipping options don’t meet their expectations, delivery becomes as important as your products themselves.

For growing online retailers, this creates a conundrum: how do you meet rising expectations without watching your margins vanish? 

Many businesses are turning to third-party logistics (3PL) providers as a solution – companies like us at J&J Global Fulfilment that specialise in storing your products, processing orders, and shipping packages to your customers.

Rather than investing in your own warehouse space, equipment, and staff, 3PL partnerships convert fulfilment from a capital-intensive operation into a variable expense that scales with your business. 

This guide breaks down the economics of working with a 3PL provider. We’ll explain how 3PL pricing works and how to evaluate potential partners to find the right fit for your business model, order volume, and short and long-term growth plans.

In this article

Contributors

Neil Sant

Chief Operations Officer

Paul Wright

Chief Technology Officer

Simon Wheeler

Chief Sales & Marketing Officer

Claudine Mosseri

Chief Commerical Officer

How Do Fulfilment Costs Break Down?

As your order volume grows, you’ll notice that order fulfilment becomes increasingly expensive and complex. 

Handling orders at your own accord is all well and good until you hit a brick wall and can’t physically do more. That old stereotype, ‘time is money,’ really holds up in fulfilment. 

Eventually, doing it yourself stops being efficient, and your business starts to feel the strain. That’s when you face a key decision: how do you scale from here? It’s a decision that can make or break your next stage of growth.

To make the right call, you first priority is understanding core fulfilment costs — what they are, and when they start to affect your business. Let’s break down them down and when they come into play.

Warehouse Space

Physical storage is often the first fulfilment bottleneck. As soon as you move into a proper warehouse setup, you have to plan around peak stock levels – not just daily averages. That often means paying for space that often sits underused, tying up cash that could be better spent on growth. And it’s not just rent on the line – you’re also committing to:

• Rent or mortgage payments
• Business rates and property taxes
• Utilities (heating, lighting, cooling)
• Security systems and monitoring
• Insurance and maintenance

Importantly, these expenses don’t change much whether you ship 100 or 1,000 orders weekly – provided your space remains the same – creating a fixed-cost burden. Moreover, it can be tough to bargain for the best rates and options as a newcomer, especially as warehouse prices are increasing rapidly.

We consistently see brands paying for warehouse capacity they only need during peak seasons. This excess space represents one of the largest hidden costs in fulfilment, tying up capital that could otherwise be invested in product development, marketing, or other growth initiatives. It’s especially challenging for fashion and gift brands where seasonal sales patterns create dramatic volume swings,

Neil Sant, Chief Operations Officer, J&J Global Fulfilment

Shipping Products to Customers

Shipping is often the single biggest cost in fulfilment – and it’s rarely as simple as a postage label. What you actually pay is shaped by a stack of variables, including:

• Base carrier rates for different service levels
• Dimensional weight calculations that often exceed actual weight
• Delivery zone pricing based on distance
• Fuel charges that fluctuate monthly
• Residential delivery fees
• Packaging materials and void fill

Again, newcomers face the steepest costs here, as they’ll struggle to secure competitive rates from major carriers. Without substantial volume or negotiating expertise, you might pay 20-40% more per package than larger operations shipping similar products. 

This cost disadvantage becomes even more pronounced when expanding internationally, as cross-border shipping introduces a whole new dimension of complexity. 

Your Fulfilment Team

Once you start to offload orders from your own to-do list, you need to consider the costs of employing fulfilment staff. Even if you just employ a small team, employment costs are more than skin deep, concerning everything from the cost of hiring and training employees to ongoing payroll and compliance costs. 

Moreover, fulfilment can be sporadic. You might need three staff to handle your average volume, but five during peaks, leaving you either understaffed during busy periods or carrying excess cost during normal operations.

Technology – The Often-Overlooked Investment

Scaling fulfilment requires more than just warehouse space. You’ll need solid systems to track orders, manage returns, monitor inventory, and record all costs. Outstanding tech isn’t cheap, and you’ll often pay upfront and then keep paying those monthly subscriptions.

Additionally, it can be frustrating how quickly you outgrow platforms. Just when your team gets comfortable with the software, you need to upgrade to something more powerful and expensive.

The technology investment is what catches most growing brands off guard, they budget for the obvious expenses like warehouse space and shipping, but underestimate how quickly they’ll outgrow basic systems.

Paul Wright, Chief Technology Officer, J&J Global Fulfilment

When you add up warehouse space, shipping, people, and technology costs, you begin to understand the true picture of fulfilment expenses. The balance between these changes as you grow – sometimes shipping hurts most, other times it’s staffing.

3PLs offer a solution by rolling everything up into a single service. Instead of building everything themselves, they tap into existing infrastructure with pricing designed for growing businesses. 

Next, we’ll explore how 3PL pricing structures actually work and what they might mean for your bottom line.

Fulfilment Cost Breakdown: In-House vs. 3PL

Before we get into the specifics of 3PL pricing, it’s important to frame what those services are really replacing. Fulfilment isn’t a single task – it’s an entire operational engine, involving space, labour, systems, and logistics. To properly evaluate a 3PL, you need to understand how its offering stacks up against scaling fulfilment in-house.

The table below highlights the key differences – not only in cost structure, but in flexibility, risk, and overall business impact.

Category	In-House Fulfilment	With a 3PL (e.g. J&J)
Upfront Investment	Significant capital outlay for warehouse lease, racking, and software, locking you into long-term overheads.	Minimal setup – you tap into an existing infrastructure with no capital tied up.
Scalability	Scaling means more space, equipment, and staff – often slow and expensive to manage.	Operations flex naturally – storage, labour, and costs scale with order volume.
Cost Predictability	Fixed costs stay high even when order volumes drop – making forecasting difficult.	Variable pricing – you only pay for what you use, improving margin control.
Shipping Rates	Limited negotiating power – you’re likely paying retail or light bulk rates.	Aggregated volume unlocks deep carrier discounts – savings are passed on to you.
Operational Risk	All fulfilment risk – staffing, errors, and delays – sits with your team.	Risk is distributed – 3PLs have the systems, staff, and backups to ensure continuity.
Technology	You manage WMS selection, integration, and updates – a costly and complex task.	Fulfilment tech (like ControlPort™) is included, with automation and reporting built in.
Labour Management	Hiring, training, scheduling, and peak planning are on your shoulders – often inefficient.	Labour is built into per-order fees – and staffing flexes automatically with volume.
Customer Experience	Speed and accuracy can drop under pressure – harming retention and reviews.	3PLs deliver consistent performance, with faster shipping, branded packaging, and fewer fulfilment errors.
Returns Handling	Reverse logistics require dedicated space and processes – often deprioritised.	Handled systematically – reducing write-offs and improving stock recovery.
International Growth	It requires separate warehousing, tax registration, and local logistics expertise, which creates a high barrier to entry.	Built-in global network – ship locally to overseas customers without starting from scratch.

How 3PL Pricing Works

If you’re new to the term, “3PL” stands for third-party logistics – companies like us at J&J Global Fulfilment that handle everything from storage and inventory management to picking, packing, and shipping.

Every 3PL prices its fulfilment services differently. There are a few core models used across the industry, but the details — what’s included, how costs scale, and where extra fees appear – can vary significantly. At J&J, we have our own way of doing things, which we’ll get to shortly.

First, let’s look at the fundamentals – the typical pricing structures, what drives costs, and how to evaluate what you’re really being charged for.

Pick and Pack Costs – Covering Labour Costs

First, we need to discuss the costs of picking and packing orders. It encapsulates the labour, expertise, and equipment needed to transform a digital order into a physical package ready for delivery.

Most 3PLs structure these fees in one of three ways:

• Per-order fee: A flat rate for handling each order, regardless of how many items it contains
• Per-item fee: A charge for each product picked, with rates sometimes decreasing for additional items in the same order
• Hybrid model: A base fee for the order plus a smaller charge for each additional item

The best option depends entirely on your typical order profile. If you primarily sell single-item orders, a per-order fee often provides the best value. For businesses with larger average order sizes, a hybrid or per-item method might make more sense.

The key to understanding pick and pack fees is recognising what they actually cover. Behind that simple line item lies a complex operation: receiving your inventory, storing it in the right location, training staff to pick it correctly, quality checking the order, selecting appropriate packaging, and preparing it for carrier collection. The right pricing structure aligns these activities with your specific order patterns to create the best possible value.

Simon Wheeler, Chief Sales & Marketing Officer, J&J Global Fulfilment

Storage – Paying for Space You Use

One of the greatest advantages of working with a 3PL is the flexibility to scale your warehouse space up and down based on requirements, rather than being locked into a fixed facility size. This creates both immediate cost benefits and long-term strategic advantages that show their strengths throughout seasonal fluctuations.

3PLs typically charge for storage in one of these ways:

• Per pallet: A flat monthly fee for each standard pallet space occupied
• Per cubic meter/foot: Charges based on the actual volume your products occupy
• Per bin/shelf location: Fixed fees for each storage location used, regardless of how full it is

The beauty of this system? Your storage costs flex naturally with your inventory levels. During peak season, you’ll pay more as your stock levels increase. During quieter periods, your costs automatically decrease as inventory sells down.

For seasonal businesses, this flexibility can create substantial savings – no more paying for empty warehouse space during the off-season.

Shipping – Tapping Into Collective Bargaining Power

Shipping represents the largest portion of most fulfilment costs, and it’s also where 3PLs show their ROI. 

Why? Because carriers offer volume-based discounts that most individual businesses simply struggle to access. When you ship through a 3PL, however, your parcels become part of their massive daily volume, unlocking preferential rates that might otherwise be unavailable. The best 3PLs:

• Negotiate volume-based discounts across multiple carriers
• Pass the bulk of these savings directly to clients
• Offer a range of service levels to match different needs
• Optimise packaging to minimise dimensional weight charges
• Provide technology to automatically select the most cost-effective shipping option for each order

Most 3PLs use either a pass-through model (charging you exactly what the carrier charges them, sometimes with a small markup) or a rate card system (simplified pricing based on weight breaks and destinations).

You might cut your shipping costs by some 15-30% on every package, which has a huge cumulative effect over time. 

The Extras – Value-Added Services and Special Requirements

Most 3PLs can stick your product in a box and slap on a shipping label. But at J&J, we offer services that turn delivery into part of your brand experience – the kind that has customers grabbing their phones to share unboxing videos.

These premium touches aren’t just fancy add-ons. They’re practical ways to stand out in crowded markets where everyone’s products start looking suspiciously similar:

• Kitting and bundling: Got a bestselling combo of products? We’ll pre-package them, saving handling time and reducing errors.
• Branded packaging: Nobody remembers the plain brown box, but they remember the one with your logo, colours, and thoughtful details.
• Personalised inserts: Those handwritten-style thank you notes and discount codes? They drive repeat purchases better than most email campaigns.
• Gift wrapping: When someone’s spending £50 on a gift, that extra £3 for proper wrapping is rarely a tough sell.
• Batch tracking: Critical for supplements, skincare, and other regulated products.
• Returns handling: The difference between “chuck it in the bin” and “inspect it, restock it, refund them, and save the margin” adds up quickly.

While these services add a few pounds to your fulfilment costs, they’re typically much cheaper than trying to handle them yourself. The equipment alone for proper gift wrapping at scale would gather dust most of the year, making it a surprisingly expensive capability to maintain in-house.

How J&J Handles 3PL Costs: Bespoke Pricing for Growing Brands

Most 3PLs force your business into rigid pricing tiers – Package A, B, or C, with zero flexibility. 

While simple at first glance, inflexible tiers create artificial pressure points in your business. Maybe you’re running at 990 orders monthly, but crossing that magic 1,000 mark triggers a price jump that erodes your margins. Or perhaps you’re paying premium rates on a complex integration you don’t fully use.

At J&J, we scrapped this outdated model entirely. We don’t believe in making your business contort to fit our pricing – we shape our pricing to fit your business profile.

• Customised pick and pack fees based on your actual order patterns, not arbitrary package levels
• Flexible storage costs that scale naturally with your inventory levels, without punitive band jumps
• Negotiated shipping rates through our carrier network, passed through without the markups that many 3PLs quietly add
• Bespoke pricing for any additional services, designed around the features you’ll actually use

The result is a 3PL solution designed specifically for your business, not a pre-packaged offering that forces you to adapt your operations to someone else’s idea of what you need.

Technology That Drives Efficiency

All our customers gain access to our proprietary ControlPort™ software platform, which doesn’t just give you visibility into your orders and inventory, but actively works to reduce your fulfilment costs through automation and optimisation.

The system:

• Automatically selects the most cost-effective shipping method for each order
• Optimises picking routes to reduce labour time
• Provides real-time inventory data to prevent overstocking
• Tracks performance metrics to identify improvement opportunities

ControlPort™’s technology-driven precision is how we achieve our industry-leading 99.9% picking accuracy and 98% same-day dispatch rate – metrics that translate directly to your bottom line through fewer returns, lower customer service costs, and higher customer satisfaction.

International Reach Without Friction

Our international network of fulfilment centres helps you expand to wherever your vision and ambition can take you. 

By strategically positioning inventory closer to end customers (aka multi-site fulfilment), we dramatically reduce both cost and transit time. Our fulfilment centres are strategically located in:

• Northampton, UK: Centrally positioned for optimal UK coverage with excellent transport links to Europe
• Venlo, Netherlands: A post-Brexit solution for frictionless EU fulfilment
• Columbus, Ohio: Our East Coast US facility offering 1-3 day ground shipping to 70% of the American population
• Las Vegas, Nevada: Situated to efficiently serve the Western US, just 50 miles from the California border
• Toronto, Canada: Eliminating cross-border complexities for Canadian distribution
• Brisbane, Australia: Providing access to the Oceania market with dramatically improved transit times

What makes this arrangement cost-effective is that you don’t need separate contracts, technology systems, or support relationships for each location. Everything operates under a single agreement, through a unified technology platform, with consistent pricing structures across regions.

“We genuinely wouldn’t have been able to expand into America without James and James. They catered for us as a smaller, rapidly growing brand with a lot of SKUs of different styles and colours – and at a competitive price.” – Alice Goldsmith, Co-founder of Dotty Dungarees.

In some cases, serving international customers with domestic-level services can prove a massive competitive advantage, as Stephen Sunley from J&J client Tala discovered:

“Things like customs are quite a difficult topic, especially since Brexit. We have to use customs declarations on a lot more orders. One of the things we’re proud of is we can ship worldwide and for a small brand that was a really big selling point to increase our global customer audience. J&J can help with that with the technology and things in place to make sure we’re always getting our customs declarations on our products when needed and they are always filled in accurately to prevent any returns and issues which would be a big task to undertake ourselves.”

For brands like Tala and many others, international shipping becomes much simpler when engaging a 3PL, which can be decisive in scaling the brand. In some cases, international markets might even prove more important and profitable than those closer to home. 

What to Consider When Choosing a 3PL Partner

Selecting a 3PL is easily one of the most consequential decisions you’ll make for your growing eCommerce business. It’s not just about outsourcing logistics – it’s about choosing a relationship that will directly impact your customer experience, operational efficiency, and ultimately, your bottom line.

When you’re drowning in proposals and rate cards, it’s tempting to focus on headline prices. Don’t. The cheapest quote rarely leads to the lowest total cost, and the slickest sales presentation often masks serious operational limitations.

Here’s what actually matters when evaluating potential fulfilment partners:

Hidden Fees vs. Transparent Pricing

Many 3PLs quote attractive base rates, then quietly pad their profits with unexpected charges that mysteriously appear on your first invoice:

• “Receiving fees” that suddenly materialise when your stock arrives
• Peak season surcharges that can double your costs precisely when you’re busiest
• “Account management” fees that weren’t mentioned during sales conversations
• Minimum monthly charges that sting painfully during your quieter periods
• “Special handling” fees that seem to apply to most of your products

Always ask about seasonal pricing fluctuations, many 3PLs implement substantial increases during Q4 that can transform a seemingly competitive rate into a margin-eroding expense when you’re at your busiest.

Simon Wheeler, Chief Sales & Marketing Officer, J&J Global Fulfilment

Don’t just review the quote – ask for sample invoices from existing clients with similar order profiles to yours. At J&J, we’re happy to share these without hesitation. The most evasive providers… well, that tells you something too.

Technology That Cuts Costs and Turbocharges Growth

The digital connection between your store and warehouse isn’t just a technical detail – it’s the nerve system of your entire operation:

• Does their system integrate directly with your specific platform version?
• How quickly do orders flow from checkout to the picking floor?
• What happens when something goes wrong? (Because it absolutely will)
• Can you see real-time inventory levels and order status?
• How do system updates and maintenance affect operations?

Don’t just ask if they integrate with your platform – ask how many clients are currently using that specific integration successfully. Request a demo using your actual products and order scenarios. The quality of this connection will make or break your customer experience.

Operational Track Record

Fancy brochures and impressive websites mean nothing if parcels don’t actually leave the warehouse on time:

• What percentage of orders genuinely ship same-day, not just during quiet periods?
• How do they measure and report accuracy? Is it proactive or complaint-driven?
• What specific processes prevent errors before they happen?
• How do staffing levels adjust during peak volume periods?
• What redundancies exist for power outages, system failures, or delivery disruptions?

Most fulfilment operations look good when handling normal volume, the real test is how they perform during Black Friday or when you run a flash sale. That’s when infrastructure limitations become painfully obvious.

Claudine Mosseri, Chief Commercial Officer, J&J Global Fulfilment

Ask for their performance metrics from the past three months, not their marketing targets. Pay particular attention to how they handled their busiest periods. Their worst day is what your customers will remember, not their average.

Cultural Fit and Communication

The day-to-day working relationship with your 3PL determines whether they’ll be a valued partner or a constant headache:

• How do they communicate when problems inevitably arise?
• Who will be your regular contact, and what’s their actual availability?
• What does continuous improvement look like in their operation?
• How do they handle special requests or genuinely urgent situations?
• What’s their process for implementing your feedback?

The best 3PLs function as a genuine extension of your team. This alignment becomes increasingly important as your business scales and your fulfilment needs grow more complex.

International Capabilities

Even if you’re focused on domestic sales today, international expansion often follows success faster than expected:

• Do they have fulfilment centres in key international markets?
• What’s their practical experience with cross-border shipping and customs?
• Can they handle country-specific requirements and documentation?
• How do they manage returns from international customers?
• What about local tax compliance and reporting?

International shipping from a single warehouse location is rarely sustainable long-term. As soon as your international sales reach about 10% of total volume, the economics and customer experience benefits of local fulfilment become compelling. Choose a partner with established global infrastructure, even if you won’t use it immediately. It only takes one viral video to multiply your international sales!

Neil Sant, Chief Operations Officer, J&J Global Fulfilment

When the stars align, the right 3PL is rocket fuel for business growth. At J&J, we aim to be exactly that kind of partner. We’ll protect your customer experience, identify opportunities you haven’t seen yet, and remove fulfilment barriers before they slow you down. 

This relationship should feel transformative, not transactional. Take the time to look beyond flashy presentations and dig into how a 3PL actually operates. Your business deserves nothing less.

Take the Next Step: Transform Your Fulfilment Strategy with J&J

Now that you understand the true costs behind fulfilment operations and how 3PL pricing actually works, you’re equipped to make an informed decision about your logistics strategy.

At J&J Global Fulfilment, we’ve transformed warehousing nightmares into streamlined operations for hundreds of growing brands. Our clients don’t just save money – they gain the freedom to focus on what actually grows their business.

Our combination of bespoke pricing, cutting-edge technology, global reach, and eCommerce expertise creates measurable improvements to both your immediate costs and long-term growth potential.

Ready to see what’s possible? The first step is a no-obligation consultation where we’ll analyse your current operations and identify specific areas where we can deliver value. We’ll show you exactly what working with J&J would look like for you and your brand. 

Contact our team today to book your consultation. Let’s turn fulfilment from a constant headache into your competitive advantage.

About the Author