Calculate total e-commerce fulfillment costs including pick & pack ($2-5/order), warehouse storage ($0.50-2.00/cubic ft/month), shipping ($5-15/package USPS/UPS/FedEx), returns processing ($3-8/return 15-30% rate), kitting/assembly ($1-3/unit), and overhead (labor, tech, insurance 20-30% of direct costs). Compare in-house fulfillment vs 3PL providers (Amazon FBA, ShipBob, ShipStation). Analyze costs per order, monthly warehouse fees, and break-even volume (typically 100-500 orders/month for 3PL switch). Factor in peak season surcharges, dimensional weight pricing, and zone-based shipping rates.
Frequently Asked Questions
What are all the costs involved in e-commerce order fulfillment and how do I calculate total cost per order?
FULFILLMENT COST BREAKDOWN (7 components): (1) PICK & PACK: $2-5/order (labor to locate item, package, label).
Small items $2, large/multi-item $5. (2) WAREHOUSE STORAGE: $0.50-2.00/cubic ft/month.
Example: 10 cubic ft × $1/cf × 60 days avg inventory = $20/month per SKU. (3) SHIPPING: $5-15/package (USPS Priority $8-12, UPS Ground $10-18, FedEx similar).
Zone 1-2 cheaper, Zone 7-8 doubles cost.
Dimensional weight (length × width × height ÷ 166) can increase charges 30-100%. (4) RETURNS PROCESSING: $3-8/return.
Inspect, restock, refurbish. 15-30% return rate typical (apparel 30%, electronics 10%). (5) KITTING/ASSEMBLY: $1-3/unit if bundling or custom packaging. (6) RECEIVING/INTAKE: $0.50-1.50/unit when receiving inventory shipments. (7) OVERHEAD: Software, insurance, management = 20-30% of direct costs.
TOTAL COST EXAMPLE (Small e-commerce): Order: 1 item, 2 lbs, ship to Zone 5.
Pick & pack: $3.
Storage (allocated): $1.50.
Shipping: $9.50 (UPS Ground).
Returns (15% × $5): $0.75.
Overhead (25%): $3.69.
TOTAL: $18.44 per order.
If selling item for $50, product cost $20, fulfillment $18.44 → profit margin = ($50 - $20 - $18.44) / $50 = 23% (acceptable).
At $30 sale price: ($30 - $20 - $18.44) / $30 = -28% LOSS (need cheaper fulfillment or higher prices).
Should I use in-house fulfillment or outsource to a 3PL, and at what order volume does 3PL make sense?
IN-HOUSE FULFILLMENT COSTS: (1) Warehouse lease: $5-15/sq ft/year. 1,000 sq ft = $833/month. (2) Labor: $15-20/hr × 2 employees (50 orders/day capacity) = $5,000/month. (3) Shipping software: $100-500/month. (4) Packing materials: $1-2/order. (5) Utilities, insurance: $500/month.
TOTAL FIXED: ~$6,500/month.
Variable: $1-2/order materials.
Break-even at ~200-300 orders/month (variable $1.50 × 250 = $375 + $6,500 = $6,875 ÷ 250 = $27.50/order). 3PL COSTS: No fixed costs.
Pure variable: $8-15/order (all-inclusive pick, pack, ship, storage for standard items).
Example: ShipBob $12/order average.
FBA $10-18 depending on size/weight.
Break-even: <200 orders/month = use 3PL (cheaper than $27.50 in-house). >500 orders/month = consider in-house (3PL $12 × 500 = $6,000/month, in-house $6,500 fixed + $750 variable = $7,250, but scales better at 1,000+ orders).
DECISION MATRIX: 0-100 orders/month: Self-fulfill from home (cheapest, $8-12/order). 100-500 orders/month: Use 3PL (no overhead, scalable). 500-2,000 orders/month: 3PL still optimal (volume discounts, multi-location warehouses). 2,000+ orders/month: Hybrid or in-house ($5-8/order achievable with automation, ROI on WMS/robotics). 3PL PROS: No upfront investment, 2-day shipping via distributed network, peak season flexibility. 3PL CONS: Less control, 5-15% of revenue (high margin pressure).
IN-HOUSE PROS: Control, branding (custom packaging), lower cost at scale.
IN-HOUSE CONS: High fixed costs, complexity, hiring/training.
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Editorial & Updates
- Author: SuperCalc Editorial Team
- Reviewed: SuperCalc Editors (clarity & accuracy)
- Last updated: 2026-01-13
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Financial/Tax Disclaimer
This tool does not provide financial, investment, or tax advice. Calculations are estimates and may not reflect your specific situation. Consider consulting a licensed professional before making decisions.