If you’re selling a product, you’re dealing with warehousing and storage costs. It doesn’t matter what your industry might be or what niche your product falls into. The problem? Chances are good that you’re not entirely clear on what you’re paying for or even if some of those costs are really necessary. Let’s explore what you need to know about warehousing and storage costs.
What “Storage” Actually Means
Storage is the cost of holding your inventory in a warehouse so it’s ready to ship when an order comes in, and several things affect what you pay here, including:
- How your inventory is stored: pallets, shelves, bins, or special zones
- How much space it uses: small-and-dense vs bulky-and-airy
- How long it sits: fast movers vs slow movers
- How often it’s touched: stable inventory vs. constant rework/kitting
A high-velocity SKU that ships daily can be cheaper to store (per unit sold) than a slow mover that takes up space for months.
The Most Common Storage Pricing Models
Most 3PLs price storage using one of these approaches:
- Pallet storage: If your product arrives and stays mostly in full cases, pallet storage is common. You’re usually billed per pallet position per month.
- Bin or shelf storage: If you’ve got smaller items, apparel, or a wide SKU count, you may be billed per bin, per shelf section, or by a defined storage unit.
- Per cubic foot: This is a “space is space” model that’s often used when products vary a lot in size.
The right model depends on what you sell. If you’re shipping small items with lots of SKUs, bin-based storage can make sense. If you’re moving cases quickly, pallet storage might be better.
Storage Is Only One Part Of The Warehousing Cost Equation
Here’s what often gets lumped into “storage costs” even though it’s technically separate:
- Receiving
- Putaway
- Handling and touches
- Inventory management and reporting
What Makes Storage Costs Spike
If you want to keep warehousing and storage costs under control, watch for these issues:
- Oversupplying slow-moving SKUs
- Bulky packaging
- High SKU complexity
- Seasonal inventory
- Poor inbound compliance
How You Can Lower Storage Costs Without Risking Stockouts
Here are a few solutions that usually help:
- Set reorder points based on velocity, not guesswork
- Trim long-tail SKUs that don’t earn their space
- Tighten packaging to reduce cube
- Ship in cleaner, better-labeled inbound shipments
- Use kitting strategically (sometimes it reduces space and picking time)
The Help You Need
Warehousing and storage costs don’t have to be surprising. Get in touch with our team, and we’ll review your SKU mix, inventory flow, and shipping patterns, then recommend a storage and fulfillment setup that fits how you actually sell.