How is warehouse storage priced?

Ask a warehouse for a quote and you rarely get a single unit price. You get a table with several lines. That is because a warehouse sells two different things. One is space and condition: every day your product sits on a rack. The other is labour: every moment it is received, prepared and shipped. This article walks through those lines so that two quotes can be compared on the same basis.

What is storage charged on?

The most common measure is a charge per pallet position per day or per month. Goods that are not on pallets, stored as cartons or units on shelving, are charged per shelf location or per square metre. The difference matters, because a half-full pallet still takes up a whole pallet position. If your goods arrive as mixed cartons, agreeing how they will be palletised before the quote can change the total space.

Ask which stock figure the charge is based on. Some warehouses use the opening stock of the month, some the average, some the peak. For a product with seasonal swings, that choice alone moves the invoice.

How does the storage condition change the price?

A product labelled for storage below 25 °C and a product that must be kept at 2–⁠8 °C do not cost the same to store. A cold room uses more energy, needs a back-up arrangement for cooling failures and closer monitoring, and in most warehouses its space is scarcer.

Products that need humidity control, and groups that must be kept apart, add cost as well. Strong-smelling goods, quarantined stock and returns waiting for a decision each need their own area.

Labour: receipt, picking and dispatch

Receipt is usually charged per pallet or per carton. It covers unloading, counting, entering the batch number and expiry date in the system, and putting the goods away.

Picking is usually measured per order line or per unit picked. Shipping a full pallet takes less work than picking cartons, and picking single units takes the most. Dispatch adds loading and the shipping documents.

This is why two companies holding similar stock can receive very different invoices. A manufacturer that ships a few full pallets a month and a distributor that sends many small orders every day use a warehouse in completely different ways.

Value-added work and reporting

Labelling, re-packing, kitting, returns handling and separating goods set aside for destruction are usually priced per job or per hour. Standard stock and movement reports are included in most quotes. A custom report, a system integration or frequent temperature reporting may be a separate line.

Questions for comparing quotes

• Which stock figure is the storage charge based on?
• Is there a minimum monthly charge or a minimum space commitment?
• What is the unit for receipt, picking and dispatch: pallet, carton, unit or order line?
• Are insurance, periodic stock counts and returns included, or charged separately?
• How long is the contract, and how are prices reviewed?

To give a realistic price, a warehouse needs a few facts: an estimated number of pallets, monthly volumes in and out, the average order size and the storage condition. The clearer these are, the easier it is to see why quotes differ. What to look at beyond price is covered in our article on choosing a storage partner.