Pricing Considerations
Gainshare: 3PL and customer thoroughly characterize existing costs of logistics and AR, and 3PL is paid in proportion to how successfully it is able to reduce those costs. Typically but not always accompanied by a fixed management fee. The size of the gainshare in proportion to any fee drives the risk level for the 3PL, justifying higher profits when the gainshare is high in proportion to any fixed fee component.
Fixed per unit rates: A unit might be a number of pallets, or given area of rack space, or number of items pick/pack/shipped, and so on. Somewhat counterintuitively, pricing that includes high, fixed per unit rates in the absence of volume guarantees can elevate the risk to the 3PL because volume swings strongly impact revenues. Can be mitigated with minimum monthly/quarterly fees, which can be seen as elevating risk to customer by limiting incentive for improvement.
Hybrids: Most contracts involve at least some level of gainshare or other financial incentive for continuous improvement on the part of the 3PL along with a fixed unit fee of some kind, as befits the individual system. Every customer at TecNXT is unique, and we find mutually acceptable arrangements for every one, adjusting as appropriate as our business relationship matures and predictability grows.
Contact us today for a free consultation regarding the best contract arrangements for your unique circumstances.