How does a fulfillment house structure its fees?
Different fulfillment houses have different fee structures, and they will often tailor their fee structures to individual clients. Business owners should be sure to talk to any potential partners about how fees will be structured and when payments will be made.
Here are some types of fees that fulfillment houses might charge:
Set-up fees: A fulfillment house will need to establish a system to handle any new clients products, and the house may impose a fee to cover costs of setting this up.
Order processing fees: One of the most common fees charged by fulfillment houses, order processing fees reflect the cost of shipping items. Usually these are based on the number of orders filled, though adjustments may be made for the number of items in each package. Business owners should make sure to ask if the cost if shipping materials is included in this fee or if it is a separate charge.
Some fulfillment houses enforce their minimum order standards through fees charged if the minimum is not met. If a business owner is worried about having to pay a minimum fee, they might want to consider using a fulfillment house with a different minimum or with no minimum fees.
Return processing fees: A fulfillment house might have a fee similar to the order processing fee for any returned items.
Storage fees: This is the fulfillment house’s charge for holding your business’ items. To keep storage charges from getting too high, you should have the fulfillment house keep only two- or three-months’ inventory of your product on hand.
Hourly rate for extra services: This will cover any work not included in other fees.
In discussing a fulfillment house’s fee structure, business owners should also find out how long their contract will be and what options they have for escaping the contract if the relationship is not working.