How Warehouses Calculate Putaway Fees: Examples, Drivers, And Cost-Saving Tips

Putaway Fee A charge for moving received inventory into its assigned warehouse storage location.

Calculating a Putaway Fee requires breaking inbound handling into measurable components—labor, equipment, distance, complexity, and WMS transaction overhead. Warehouses use several pricing models: per-pallet, per-case, per-line, hourly labor rates, or blended inbound prices. Choosing the right model depends on SKU mix, volume predictability, and customer billing preferences.

Common Pricing Models

• Per-Pallet: Simple and common for full-pallet receipts; charges a fixed amount per pallet moved to storage.
• Per-Case / Per-Each: Applied when goods arrive as cases or individual units and must be stored in non-palletized slots.
• Per-Line: Pricing tied to the number of unique SKUs or order lines in a shipment to capture SKU complexity.
• Hourly Labor: Used for irregular or high-touch inbound work where time is the accurate cost driver.
• Blended Inbound Fee: A single rate that bundles receiving, putaway, and light processing—simpler invoicing for high-volume customers.

Primary Cost Drivers

Several operational factors increase putaway costs: distance from dock to storage, the need for two-person handling, requirement for special lifts or narrow-aisle trucks, hazardous materials handling, breakdown and repalletization, and whether each pallet requires unique labeling or slotting decisions. SKU velocity and slotting strategy also matter: slow-moving SKUs placed in deep, remote slots can increase time-per-putaway.

How To Estimate Putaway Cost

To estimate putaway cost for a shipment, calculate the expected labor minutes per unit, add equipment hourly cost, and include per-transaction WMS overhead. Example methodology:

• Step 1: Estimate average minutes to move one pallet to its location (including travel time and scanning).
• Step 2: Multiply minutes by labor cost per minute (wages + burden).
• Step 3: Add equipment depreciation/usage per minute and any materials cost (labels, stretch wrap).
• Step 4: Add a fixed WMS transaction fee per pallet or per SKU if the WMS charges per transaction.

Practical Calculation Example

Assume a warehouse estimates 12 minutes to put away one pallet, labor cost including benefits is $0.50/minute, equipment allocation is $0.08/minute, and a $1.50 WMS transaction overhead applies. Total per-pallet putaway fee = (12 × $0.50) + (12 × $0.08) + $1.50 = $6.00 + $0.96 + $1.50 = $8.46. The warehouse might round or apply a standard market rate, e.g., $8.50 or $9.00 per pallet.

Operational Measures To Reduce Putaway Fees

• Slotting Optimization: Placing fast-moving items closer to receiving reduces travel time and lowers per-putaway minutes.
• Pre-Labeling: If merchants supply barcoded, clearly labeled pallets, scanning and location assignment are faster.
• Batch Putaway: Grouping multiple received pallets destined for the same zone lowers touches per unit.
• Use Of Conveyors/Automation: Conveyor-fed putaway or automated storage/retrieval systems (AS/RS) reduce manual labor and stabilize costs.

Contract Clauses To Watch

• Minimums: Per-inbound minimum charges can increase cost for small shipments.
• Threshold Pricing: Different rates for mixed vs full pallets—understand when higher handling surcharges apply.
• Chargebacks: Rules for incorrectly labeled or undocumented shipments that create additional putaway work.
• Turnaround Time: Fees for expedited same-day putaway versus standard deferred scheduling.

Tips For Warehouses Setting Putaway Fees

• Measure First: Time studies on actual putaway tasks yield defensible rates.
• Segment Pricing: Offer clear rates for palletized, broken-down, and special-handling putaway to align with operational cost drivers.
• Offer Volume Tiers: Provide incentives for merchants to commit volume in exchange for lower putaway unit cost.

In short, the Putaway Fee should reflect the actual labor, equipment, and systems cost of placing inventory into storage. Transparent measurement, appropriate pricing models, and targeted operational improvements are the fastest way to make fees predictable and to reduce them over time.