Who Pays Pick Fees and Who Charges Them? Roles in Fulfillment Billing

Pick Fee responsibilities can seem confusing at first, but once you map the players in the fulfillment chain, it becomes clear who charges and who pays. This guide explains the typical roles, why each party pays or charges pick fees, and practical examples for beginners.

Primary parties involved

• Warehouses and fulfillment providers (sellers of the service): These entities charge pick fees. They operate the warehousing space, staff the workforce, and maintain equipment. The pick fee compensates them for labor and handling tied to retrieving items from storage.
• Merchants and brands (buyers of the service): Small retailers, direct-to-consumer brands, and larger merchants typically pay pick fees when they outsource fulfillment to a 3PL or a marketplace fulfillment program.
• Marketplaces and platform operators: Some platforms (marketplaces) operate their own fulfillment centers or aggregate fees into platform costs. Sellers list on these platforms and may indirectly pay pick fees as part of a combined fulfillment charge.

Who charges pick fees?

• Third-party logistics (3PL) companies: 3PLs provide storage, picking, packing, and shipping services. Their commercial terms usually include a pick fee line item on invoices.
• In-house warehouses: Large retailers who run their own warehouses may use internal accounting to assign pick cost centers. In this case, the "charge" is part of internal cost allocation rather than a cash payment to an external supplier.
• Fulfillment by marketplace operators: Marketplaces with fulfillment arms (fulfillment centers for sellers) quote seller fees that often include a pick-related component even if not shown separately.

Who pays pick fees?

• Merchant or seller: When a merchant contracts with a 3PL or marketplace fulfillment, they typically pay pick fees per the provider's rate card.
• Marketplaces (indirectly): For some marketplace models, the marketplace deducts fulfillment fees (including pick fees) from seller payouts, making the seller effectively the payer.
• End consumer: Consumers rarely pay a discrete pick fee, but shipping charges and product prices are set so that the merchant indirectly passes pick costs along to buyers.

Special cases and variations

• Dropshipping: If a supplier or vendor handles fulfillment, the retailer or platform pays the supplier; pick fees are part of the supplier's cost and are typically included in the wholesale or fulfillment invoice.
• Freight forwarders and cross-dock operations: Some operators charge handling fees for sorting or cross-docking shipments; these are conceptually similar to pick fees but may be billed differently.
• Subscription or flat-rate fulfillment services: Some providers offer flat monthly fees that bundle pick costs. The merchant pays the bundled rate instead of per-pick charges, which can be advantageous for predictable order volumes.

Practical examples

• A small DTC brand contracts a regional 3PL. Each outgoing order incurs a $0.75 pick fee per item. The brand pays the 3PL based on the monthly invoice.
• An online marketplace lists sellers and offers an integrated fulfillment option. The marketplace charges sellers a fulfillment fee that includes picking, packing, and shipping. The seller has the fulfillment costs deducted from their settlement amount.
• A retailer with internal warehouses allocates pick cost centers to product teams. The business line "pays" via internal accounting to reflect the true cost of order fulfillment.

How billing arrangements can affect behavior

Who pays pick fees influences packaging, SKU assortment, and pricing. If pick fees are paid per unit, merchants may package multiple items together or offer bundled products to reduce picks per order. Sellers might also adjust pricing to absorb pick costs or raise average order value to keep per-order pick fees proportionally lower.

Negotiation and transparency

When choosing a fulfillment partner, merchants should request transparent fee schedules and real invoice examples. Ask whether pick fees are negotiable with volume, whether batching or automation discounts are available, and which activities are included or excluded. Transparency helps avoid surprises and aligns incentives between the merchant and provider.

Key takeaways



• Pick fees are charged by fulfillment providers and paid by the party outsourcing fulfillment (typically the merchant).
• Marketplaces may bundle pick fees into their service fees, making the seller the effective payer.
• Understanding who pays and how fees are structured helps merchants control costs and design smarter fulfillment strategies.