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3PL vs. Lease Cost Calculator

Compare the full annual cost of a 3PL against running your own warehouse, including the costs most comparisons leave out, and find the crossover volume.

Your volume

Use realistic numbers, not ambitious ones — then re-run at 60% to stress-test the answer.

Peak, not average.

3PL rate card

Replace these with figures from an actual quote. They are placeholders, not market rates.

$/pallet/mo
$/pallet
$/order
$/item
$/mo
Your own lease

Rent defaults to the JLL national average asking rate; your submarket will differ, often a lot.

sq ft
$/sf/yr
$/sf/yr

Taxes, insurance, CAM.

$/yr

Wages plus employer taxes and benefits.

$

Racking, forklifts, dock kit.

yrs
$/yr
$/sf/yr
$/yr

Annual cost

3PL
$209,520

$8.73 / order

Own lease
$860,000

$35.83 / order

3PL is cheaper by
$650,480
per year, at this volume
Crossover volume
15,552 orders/mo
above this, your own building wins

Where the money goes

3PL

  • Storage$96,000
  • Receiving$11,520
  • Pick, pack & handling$96,000
  • Account minimum$6,000

Own lease

  • Base rent$313,500
  • NNN (taxes, insurance, CAM)$90,000
  • Labour (fully loaded)$330,000
  • Equipment (amortised)$60,000
  • WMS & integration$24,000
  • Utilities$22,500
  • Insurance, consumables, other$20,000

The lease side is modelled as fixed against order volume. In reality enough volume forces another shift, so treat the crossover as indicative. It also ignores the asymmetry that matters most: leaving a 3PL is a planned graduation, while exiting a lease early is expensive.

How this is calculated

Most 3PL-versus-lease comparisons flatter the in-house option, because they compare a 3PL invoice against rent. Rent is a fraction of the real number. This model forces both sides onto the same footing.

Every rate here is yours, not ours

The form ships with placeholder figures so it does something useful on first load, but they are not market rates. 3PL rate cards vary enormously by volume, region, and what you negotiate; industrial rent varies more. Replace them with numbers from an actual quote before you trust the output.

The one exception is the default base rent, which starts at JLL’s reported US national average asking rate. That is a national average across a very wide range — coastal infill and Midwestern bulk distribution are not the same market — so treat it as a starting point, not an estimate for your submarket.

What the lease side includes

Base rent, NNN pass-throughs, fully loaded labour, amortised equipment capex, WMS and integration, utilities, and a catch-all for insurance and consumables. These are the lines that get omitted from back-of-envelope comparisons and that together usually exceed the rent itself.

The crossover

The crossover volume is where the two models cost the same. It treats the lease as fixed against order volume and the 3PL as fixed costs plus a per-order variable — which is why the 3PL wins at low volume and loses at high volume.

The lease side is not truly fixed: enough volume forces another shift, more equipment, or a bigger building. Read the crossover as an indicative threshold rather than a precise number.

Two things the model cannot price

Being wrong is not symmetric. Graduating from a 3PL to your own building is a planned move. Exiting a lease early means paying rent on a building you no longer want while also paying someone else to do the work. That asymmetry argues for the 3PL whenever the numbers are close.

Stress-test the forecast. Run it again at 60% of your expected volume. If your own building only wins at the ambitious number, you are betting the lease on a forecast. That question settles more decisions than the base case does.

Sources

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