How to Calculate Warehouse Cost Per Square Foot?

The expenses related to running a warehouse, including rent, utilities, labour, insurance, upkeep, and taxes, are referred to as warehousing costs. According to my research, the approximate warehousing cost per square foot ranges from Rs. 15 to Rs. 25 per square foot per month. 

What are the Factors Affecting the Cost of Warehouse Per Square Foot?

• Location:

While warehouses in more populated locations can take advantage of economies of scale, warehouses situated closer to suppliers and consumers can save on transportation costs.

• Size:

Pricing is also impacted by the storage facility's size. Larger warehouses are more expensive to run since they need more personnel and equipment.

• Storage:

Automated and climate-controlled warehouses can be more expensive.

• Labour:

Staffing requirements can change based on the facility's size and complexity.

Apart from these factors, some of the other factors that affect the warehouse rate per square foot are technology, security, and insurance. 

I hope this helps!

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Financial planning, logistics planning, and inventory planning all depend on the capacity to accurately assess and report the cost per square foot warehouse. There are several elements which must be considered while calculating these charges. Capturing this data might be challenging, but it is vital if a firm is to know its true costs and profit and establish where changes can and should be made. So, if you are planning to construct or renovate your warehouse, and are not sure about the cost per square foot warehouse, I will help you out.

How to calculate warehouse cost per square foot?

Prior to determining warehouse expenses, there are a few things to consider.

• The warehouse's exterior walls should be measured. This needs to cover every portion of the structure for which you are paying rent and which is regarded as the warehouse. Next, figure out how many square feet the warehouse has. We'll utilise a warehouse that is 230 feet long and 175 feet deep for the purposes of this illustration. 175 x 230 = 40,250 square feet are the total as a consequence.

• Examine the financial papers to find out what costs the warehouse incurred in the preceding 12 months. Include the price of the building's rental, utilities, security contracts, and any additional fees for services like janitorial or gardening. Payroll expenses as well as any employee benefits, such as health insurance, contributions, and taxes, should be included. Include the cost of equipment like forklifts, copiers, computers, and automobiles as well as the cost of insurance. Add any additional costs the warehouse incurred during the time period to this list. Once all the information has been gathered, add up the totals to get the annual cost of running the warehouse.

• Subtract the square footage of the warehouse from the total expenses incurred by the facility. Your cost per square foot would be Rs. 18.63 if Step 2 cost a total of Rs. 750,00. When comparing the price of a new facility to an existing facility, this information is useful.

• Create a second storage cost calculation. Add the total number of units currently kept in the warehouse to the total number of units shipped during the preceding 12 months. This figure represents all the units handled in the preceding year. With 500,000 units handled in this example, multiply the total warehouse cost of Rs. 750,000 by the number of units handled, giving you a warehouse storage cost of Rs. 1.50 per unit. This figure can be used to identify areas for improvement, the overall profitability, and the impact of changes on the cost per inventory unit.

This is all you need to be aware of regarding the cost per square foot warehouse.