You can limit the cost of your warehouse construction by working with a company that can both design and build the warehouse for you. Whether you choose tilt-up concrete construction or steel framing, a design-build construction company should handle every aspect of the project.
Cost Of Buying A Warehouse
The warehouse building process can take as little as 48 hours for smaller, simple projects. It can take up to 3 weeks for larger more complex buildings with multiple units that may require special materials.
The most frequently asked question we receive from customers is how much does outsourced warehousing cost? While it is a complicated answer, back in 2017 we started collecting data from our extensive network of warehousing and best fulfillment companies each year in order to help both businesses and warehouses alike to understand average warehousing pricing and costs. This page is the culmination of many years of work, and includes historical survey results from each of our annual warehousing costs and pricing surveys. With data accumulated from both the warehouses in the US and warehouses in Canada, the results help companies searching for pricing information for 3PL companies near me or throughout all of North America.
Before we jump into the most recent warehousing costs and pricing survey results from 2022, we want to provide a few important pieces of information to not only navigate the page easier, but also to summarize key data into a helpful table of important warehousing costs and to explain some of the differences in warehousing costs between outsourcing and leasing or purchasing a warehouse.
I want to say thank you for your help in finding a warehouse so quickly. Your service was amazing. I received replies the same day and have selected a company that will work well for us. I definitely recommend your services.
The cost of renting, leasing, or purchasing a warehouse space varies dramatically, depending upon several key factors: the location of the warehouse, the supply or scarcity of warehouse space in the area, the size of the warehouse space, the intended use of the space, and the amenities of the warehouse itself.
As opposed to using an outsourced solution as detailed above, calculating the cost of renting, leasing, or purchasing a warehouse requires the use of an equation and is a little more complicated. The elements of the equation to calculate the cost of a warehouse are as follows: how much warehouse space you will be using, the monthly or annual rate to rent, lease, or purchase the space, and the estimated operating expenses to utilize the warehouse.
The average warehouse cost per year per square foot in our latest survey to rent a warehouse was $7.96. Operating costs can easily add another $2-5 per square foot to the overall costs of renting warehouse space. Operating expenses can reasonably be estimated as follows:
The overall cost of a small warehouse is obviously lower than the cost of a large warehouse. However, the monthly warehouse rental rate per square foot for a small warehouse may be higher than that of a larger warehouse. This is because the landlord is subdividing the space. The price of a small warehouse is more cost effective than a larger space because all the operating costs will be a smaller percentage of the whole space.
Building or purchasing a warehouse space is by far the most expensive option for procuring warehouse space. While it does represent a tremendous investment opportunity, it is best suited for a company with cash reserves and/or an ability to secure a long-term loan or note. The warehouse price or cost will vary based on the same criteria listed above but will also include the type of materials used to construct the building and any added functionality added to the construction. The cost of purchasing or building a warehouse can range from $20 per square foot to $50+ per square foot.
This is our fifth year completing the annual Warehouse and Fulfillment Costs and Pricing Survey. We sincerely appreciate everyone who took the time to complete the survey since the information compiled helps give an overview of what is taking place in the warehouse and fulfillment industry.
Before presenting the results, it is important to note we did not record which answers were associated with a particular warehouse to maintain confidentiality and to allow for in-depth feedback without the risk of divulging important information. We felt this would keep responses open and detailed, which in-turn helps us in being able to provide the best and most detailed feedback.
Fourth, we calculated the averages to questions that had multiple formats. For example, if we asked warehouse owners what they pay their management, we may receive inconsistent answers with replies that include both salary and hourly wages. The same is true when answers were given for pick and pack companies pricing for pick and pack per order vs. charges per order or per item fees.
Since each of these areas are important to the overall operation of a warehouse, we feel it was important to look individually at the results to gain a better perspective of how warehouse owners handled their operations.
Not surprisingly, 80% of warehouses increase pricing on a regular basis. The percentage of warehouses that increased pricing annually dropped from 69% in 2020 to 61% in 2021 to 51.61% in 2022. Only 3% of the companies increased pricing on a semi-annual basis, and 37.10% of the companies increased pricing every two years. Finally, 8.6% of those surveyed increased pricing every five years, no doubt allowing customers to lock into preferred rates for extended terms. Of those surveyed in 2022, those that do adjust rates up do so by an average of around 3.9%.
The average costs per square foot of warehouse space in 2022 was $7.96. Over the last year, the average wage for an hourly warehouse employee increased less than $1 per hour to $14.97, whereas the average annual pay for a warehouse employee dropped by almost 6% to $52,790 per year. The survey also indicated a slight drop in the corporate profit to 10.58%.
What is probably the most useful information to customers is understanding how costs affect them overall when working with a fulfillment center. Pricing can be extremely difficult for customers to understand, oftentimes requiring them to use a fulfillment cost calculator. The survey included interesting results about pricing structure, discounts, and services, providing valuable data as to what is offered and expected.
The average B2C pick and pack fee remained the same in 2022 at $3.13 per single item while the average B2B pick and pack fee for single item orders slightly increased to $4.33. In 2022, only 64.29% of those surveyed offered a discounted pick and pack rate, which is a decrease of approximately 7% from the previous year. The volume at which discounts applied was an average of 2,348 orders per month; the lowest volume discount was 500 orders per month and the highest volume discount was 5,000 orders per month. The average discount was around 6.5% and ranged from 2-10%. Fully half of the warehouses surveyed indicated they require monthly minimums for customers. In terms of dollar amounts, the average monthly minimum was $740.79. In terms of orders per month, the average monthly minimum was 250 orders per month.
Our survey found that warehouses continued to use and evaluate a variety of ways to charge for shipping services. Slightly over 68% of warehouses offered a cost-plus model which continues to be the most popular shipping method. The second most common shipping method was allowing customers to use their own freight accounts. The other options included 19.70% of warehouses offering a discount off published rates, 6.06% of the warehouses not offering a discount, and 3.30% of the warehouses handling discounts by other methods. The average shipping discount for ground was 21.82%, 26.40% for express, 24.71% for international, and 57.30% for LTL services. On average, the mark-up on ground shipments was 18.7% with a 20.8% mark-up for express shipping, 18.11% for international shipping, and 21.9% for LTL shipments.
Just over half of the warehouses surveyed reported they did charge a set-up fee ranging from $150-1,500. The average set-up fee was $368. Most of that cost ($274) was attributed to cart integration. More than half of the responses indicated they charged an account management fee ranging from $30-500 per month or $61.67 per hour. The average account management fee per month was $198.93. And, when customers needed to utilize call center services, the average fee was $1.43 per minute.
Finally, we asked a new question this year regarding what software programs warehouses were using. The most popular response at 29% was 3PL Central. Custom-built WMS systems and Ship Edge were used by 16%, Ship station at 7%, Veracore at 5%, and Camelot at 4%.
Each year, insightQuote conducts a warehousing cost and pricing survey, and we now have our results in from our survey concluded for 2021. Some incredible insights came out of this venture that we would like to share with the world. Before we get to that, we need to be clear about some of the assumptions that this survey makes so that people will understand how we tabulated the results that we received and what they mean in context.
The data that we collected was not connected back to the specific warehouse that answered the question. In other words, the answers were anonymous so that all participants felt that they could give their most truthful and honest answers. We were also careful to note any extreme answers that were far outside the bounds of the averages. This helps weed out the wildly high or low answers from the survey that might otherwise skew the data. Our goal in doing this was to try to find the most accurate averages in order to provide useful data to our readers.
There was no attempt made on our part to separate out the data based on geographic location for these summary results. Obviously, labor costs and warehouse lease rates will differ based upon location. Therefore, costs for a 3PL in Los Angeles will vary versus costs for a 3PL in New Jersey, 3PL in Chicago, 3PL in Dallas, 3PL in Houston, 3PL in Miami, or a 3PL in New York. However, we wanted to find the natural averages as they presented themselves through different areas, and thus we left in all data and did not attempt to segregate it based on geographic region.
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