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The Storage Dilemma: Bin Locations vs. Cubic Foot Storage Costs

Written By: Justin Tyme Freightman
Warehouse interior with tall racks of stacked boxes on pallets. Black and white, orderly arrangement, spacious setting, no visible text.

In the world of logistics and warehousing, efficient storage management can make or break your bottom line. Two common methods of warehouse storage costing are bin location pricing and cubic foot pricing. While both have their place in managing inventory, choosing the right model depends on your business's needs. In this article, we’ll break down the differences between these methods and highlight why cubic foot storage cost is often the superior choice for modern logistics.


What Are Bin Location Costs?


Bin location costs charge clients based on the number of specific storage locations used in a warehouse. A "bin" could be a shelf, pallet space, or compartment. This method assigns a fixed cost per bin or space, regardless of the actual volume of inventory stored in it.


Advantages of Bin Location Costs:


  1. Predictability: Costs are straightforward—you're charged per bin, making it easy to estimate monthly storage expenses.


  2. Simplicity: Bin locations are easy to track, and fixed charges per bin provide transparency.


  3. Good for Low-Turn Inventory: If you have slow-moving or static products, this system works well.


Drawbacks of Bin Location Costs:


  1. Wasted Space: Bin pricing doesn’t account for how efficiently space is used. A half-empty bin costs the same as a full one.


  2. Inflexibility: As your inventory grows, you may be forced to rent more bins, increasing costs significantly without optimizing space.


  3. Higher Costs for Small Items: Small, lightweight items stored in multiple bins can incur higher costs relative to their size or value.


What Is Cubic Foot Storage Cost?


Cubic foot storage costs charge based on the actual volume (in cubic feet) your inventory occupies in the warehouse. It provides a variable pricing structure, ensuring businesses pay only for the space they use.


Advantages of Cubic Foot Storage Costs:


  1. Cost Efficiency: You only pay for the actual space your inventory occupies, reducing waste and maximizing cost savings.


  2. Scalability: As inventory fluctuates, so do costs, making it easier to scale up or down without overpaying.


  3. Flexibility: Works well for businesses with varying product sizes and volumes, ensuring fair pricing for both small and large items.


  4. Increased Utilization: Warehouses using cubic foot pricing are incentivized to optimize stacking, shelving, and space management, benefiting clients.


Drawbacks of Cubic Foot Storage Costs:


  1. Complexity: Calculating costs based on volume can require more precise inventory measurements.


  2. Fluctuating Costs: For businesses with rapidly changing inventory levels, monthly costs may be less predictable.


Bin Locations vs. Cubic Foot Storage: A Cost Comparison


Here’s a simple example:


  • Scenario: A business stores 1,000 units of inventory. Each unit is small enough to fit in a bin, with 10 units per bin.


  • Bin Location Model: At $5 per bin per month (a common bin price in the 3PL industry), the cost is $500 per month for 100 bins. Even if some bins aren’t full, the cost remains the same.


  • Cubic Foot Model: If each unit takes up 0.5 cubic feet, the total storage is 500 cubic feet. At $0.54 per cubic foot per month, the cost is $270 per month.


In this example, cubic foot pricing saves $230 and provides a more accurate reflection of the actual storage space required.


Why Cubic Foot Storage Costs Are the Future


The logistics industry is moving toward smarter, data-driven solutions. Cubic foot pricing aligns with modern trends like automation, dynamic storage optimization, and cost transparency. Here’s why businesses are favoring this model:


  1. Optimized Space Usage: Warehouses leveraging cubic foot pricing often deploy advanced tools (like vertical shelving and automated storage systems) to maximize space, reducing costs for clients.


  2. Fairer Pricing for Diverse Inventory: Businesses with varied product sizes benefit from a system that doesn’t penalize them for using bins inefficiently.


  3. Flexibility for Growth: As companies scale or experience seasonal spikes, cubic foot pricing adapts seamlessly without the need for renegotiating bin allocations.


The Moshipco Advantage: Embracing Cubic Foot Storage


At Moshipco, we’ve adopted the cubic foot storage cost model to ensure our clients receive the most efficient and cost-effective solutions for their inventory. Here’s how we add value:


  • Real-Time Inventory Tracking: We use advanced systems to measure and track your inventory volume, ensuring complete transparency.


  • Dynamic Storage Solutions: Our warehouses are designed to adapt to your needs, using vertical stacking and optimized layouts to minimize costs.


  • Scalable Pricing: Whether you’re storing small promotional items or bulk products, our pricing remains the same cubic foot calculation to reflect your true storage cost based on your inventory alone. Every order that gets shipped reduces your overall storage costs.


While bin location pricing may work for some businesses, cubic foot storage costs offer unmatched flexibility, fairness, efficiency and almost always costs less. By charging for the actual space used, companies can reduce waste, optimize budgets, and focus on growing their operations.


At MoShipCo, we’re proud to be at the forefront of logistics innovation. Ready to see how cubic foot pricing can revolutionize your warehousing strategy? Contact us today to learn more!

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