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Third Party Logistics Cost Calculator

Work out third party logistics cost instantly with clear inputs, formula shown and shareable results.

About Third Party Logistics Cost Calculator

Third-party logistics pricing separates storage, charged per pallet per month, from handling, charged per order or per line. The all-in cost per order is the figure to compare with an in-house operation, and it makes the storage burden of slow-moving stock visible.

Formulas

Monthly cost

Cost = Storage rate x Pallets + Handling rate x Orders

All-in cost per order

Per order = Total monthly cost / Orders per month

Worked example

With the default values below, Third Party Logistics Cost Calculator returns Monthly third-party logistics cost of $2,674,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Storage cost per pallet per month
950
Pallets stored
1,400
Handling cost per order
280
Orders per month
4,800

Results

Monthly third-party logistics cost
$2,674,000.00
Storage component
$1,330,000.00
Handling component
$1,344,000.00
All-in cost per order
$557.08

Step by step

  1. 1Values used
  2. 2Monthly cost
  3. 3All-in cost per order
  4. 4Monthly third-party logistics cost= 2,674,000.00
  5. 5Storage component= 1,330,000.00
  6. 6Handling component= 1,344,000.00
  7. 7All-in cost per order= 557.08

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Which is cheaper, third party or in-house?

Third party usually wins below about 5,000 orders a month or where volume is seasonal, because you buy capacity rather than build it.

What drives cost overruns?

Slow-moving stock accumulating pallet charges, and per-line handling fees on multi-line orders that were priced on a per-order assumption.

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