Data is the Key to Accurate Warehouse Pricing

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.