---
title: "Fulfilment cost: definition, formula and example"
description: "What it costs to get an order out: pick and pack, extra picks, the box and the label. Charged per order or parcel, which is why bundles and gifts change it."
url: https://offersuite.io/glossary/fulfilment-cost
updated: 2026-10-13
---

# Fulfilment cost

What it costs to get an order out: pick and pack, extra picks, the box and the label. Charged per order or parcel, which is why bundles and gifts change it.

## In plain words

Fulfilment cost is what your warehouse and carrier charge to get an order to the customer. That covers a base fee to pick and pack the order, a smaller fee for each additional item picked, the box and fill, and the shipping label.

The grain is what matters. Some costs are charged once per order, some once per parcel, some once per unit. A three-unit bundle pays one base fee and one label but three picks. A gift adds a pick but no label. Counting every fee per unit, or every fee per order, gets bundles and gifts wrong.

## Formula

- Fulfilment = pick and pack (per order) + extra pick × (units − 1) + packaging (per parcel) + label (per parcel)

## Worked example

One bag is fulfilled for $1.18 pick and pack, a $0.50 box and a $7.50 label.

Three bags in one parcel pay the same base fee, box and label, plus $0.40 for two extra picks. Per bag, fulfilment falls to roughly a third, which is most of why a bundle can be discounted and still earn more per order: the engine puts the three-bag order's margin at $48.06 against $15.36 for one bag.

### The example order

A $40.00 bag of coffee, shipped free, every cost counted

Revenue $40.00 to contribution margin $15.36 (38.4%)

Revenue

$40.00

Cost of goods

−$12.00

Pick and pack

−$1.18

Packaging

−$0.50

Shipping label

−$7.50

Card fee per order

−$0.30

Refunds

−$2.00

Card processing

−$1.16

Contribution margin

$15.36

2 declared kinds cost nothing on this option

Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost.

## Fulfilment cost is not shipping revenue

What you charge the customer for shipping is revenue. What the carrier charges you is cost. A free-shipping offer changes the first and leaves the second alone. It is a revenue decision, and it should be priced as one.

## Using it

Get the grain right from your warehouse contract: which fees are per order, per parcel, per unit or per extra unit. Then price bundles and gifts with it. A contract that charges per unit makes bundles less attractive than one that charges per order, and a gift that needs special packing can cost more to handle than to buy.

## In Offer Suite

Offer Suite's engine counts every cost kind exactly once, at its grain: per unit, per parcel, per order, or as a percentage of revenue. A per-parcel kind on a three-pack is counted once and a per-unit kind three times.

Source: Offer Suite's margin engine and its cost grains.

## Related

- [Glossary **Glossary of offer economics** The terms behind offer profit, defined plainly with their formulas and a worked number: contribution margin, profit per visitor, break-even lift and more.](https://offersuite.io/glossary)
- [Calculator **Bundle pricing calculator: shipping, subscriptions** Price a bundle against a single unit, one-time and subscribed, with the shipping and pick costs it saves, and the conversion it can lose and still earn as much.](https://offersuite.io/calculators/bundle-pricing)
- [Calculator **Gift with purchase profit calculator** What a free gift costs per order, after its unit cost, its extra pick and its handling, and how much conversion it has to add to pay for itself.](https://offersuite.io/calculators/gift-with-purchase-profit)
- [Calculator **Offer option calculator: profit per visitor** Compare up to three offer options on profit per visitor, margin per order times conversion, and see the conversion lift each one needs to match the best.](https://offersuite.io/calculators/offer-option-profit-per-visitor)
- [Glossary **Contribution margin: definition and formula** What an order keeps after every cost that grows with it: product cost, fulfilment, shipping, card fees and refunds. The number an offer should be judged on.](https://offersuite.io/glossary/contribution-margin)
- [Glossary **Landed cost: definition, formula and example** A unit's full cost on your shelf: the supplier's price plus inbound freight, duties and brokerage. The unit cost an offer should be priced on.](https://offersuite.io/glossary/landed-cost)