Third party logistics providers use different warehouse pricing models to determine their costs for warehouse storage and services. But the approaches are pretty similar across providers. We all look at a variety of data, including product volume, case size, pallet size and weight.

For a primer on warehouse pricing, download our Commercial Warehouse Pricing Guide.  

To get the pricing right, we need accurate data on the account characteristics to plug into a pricing model. Understandably, shippers often can’t provide all the details requested. Here are some actual shipper responses to pricing worksheet questions:

• “I’m not sure about the number of pallets, but it’s 25,000 pounds.”
• “I don’t have access to this information. Would need to talk to the systems department to get it, and they’re busy.”
• “I think it will be 500-1,000 orders a day, I think.”
• “I don’t have any of this data, they just asked me to find a warehouse in your city.”
• “For number of orders, just use the average orders for your others customers who are like me.”

When a 3PL doesn’t have the data for its warehouse pricing model, the company has to make assumptions. For example, let’s say a shipper does not know if products can be stored 2 pallets high or 3 pallets high. If the 3PL needs to charge $15 per pallet footprint, then the rate for 2-high storage would be $7.50 per pallet. But if the product can be stored 3-high, the rate would drop to $5.00 per pallet.  

You can see how missing or incorrect data will result in inaccurate rates. When it comes to commercial warehouse pricing, accurate data on the current operation is everything.