Pallet equivalents, explained: how footprint billing actually works

If you've ever billed a 3PL customer for storage, you've had this argument: a customer drops off a stack of goods that takes up about a pallet and a half on your floor. You charge them for 2 pallets. They push back. You explain that you can't half-rent a location. They go quiet. Two months later, they shop the rate around.

The fix is older than warehouse software: pallet equivalents. Most operators have heard of the idea, but very few actually use it consistently — usually because the spreadsheet maths gets messy.

What a pallet equivalent really is

A pallet equivalent (PE) is a unit of warehouse footprint. One standard UK pallet (1200 × 1000 mm × 1.5 m tall) is 1.0 PE. Everything else is measured against that.

• A half-height pallet that only stacks one level is still 1.0 PE because it occupies the bay.
• A double-stacked pallet that fits one bay top-to-bottom: 1.0 PE (same floor footprint, vertical density is yours).
• A US-spec 48×40" pallet sitting in a UK bay: 1.0 PE — but you might add a cap because it overhangs and the bay can't hold a second next to it.
• A small half-pallet (600 × 800 mm) sharing a bay with another small one: 0.5 PE each.

The point isn't the maths. The point is you've defined a unit of capacity that's tied to the bay, not the SKU. Once you have that, billing stops being an argument.

Why "just charge per pallet" breaks down

Every operator hits the same three breaking points when they bill in whole pallets:

1. Part-pallet customers. A retail client with 20 SKUs and low velocity. Each SKU is a quarter-pallet. You charge them 20 pallets when they're using 5 bays. Either you over-bill and lose them, or you under-bill and your floor margin collapses.
2. Oversized loads. A customer drops a non-stack pallet on a 2-pallet-tall bay and you've lost half the space above it. "1 pallet" doesn't reflect what just happened to your capacity.
3. Mixed-pallet bays. A bay holds two small consignments from different clients. Pallet-count gets you nowhere here.

Pallet equivalents handle all three because they're tied to floor footprint and height clearance, not to the physical pallets themselves.

The two numbers that matter

Two columns on the bay master:

• capacityPalletEquivalents — how many PEs this bay can hold. For a standard bay it's 1.0. For a wide bay with two small slots it might be 2.0. For a half-height bay over a flow lane: 1.0 but with a maxFootprintMultiplier of 1.0 (can't accept a 2.0-PE pallet).
• currentPalletEquivalents — how many PEs are sitting there now. Sums of the inventory's per-SKU footprint.

Storage charges become a flat lookup: currentPalletEquivalents × rate × days. No more rounding-up arguments.

The conversation it changes

Once you're billing in PEs you can do something most 3PLs never do: show the customer their utilisation curve. Charts of how many PEs they used per day for the last month. The 0.5-PE SKUs they could consolidate to free up bays. The 2.0-PE pallet that's costing them double because it can't share a bay.

You stop being the warehouse that charges "1.5 pallets, sort of". You become the warehouse with a defendable rate card. Which, when the customer is shopping you around, is exactly what wins the renewal.

Where to start

If you're billing in whole pallets today and want to move:

1. Pick your reference pallet. Standard UK 1200×1000, 1.5m. That's 1.0 PE.
2. Audit your bays. Wide ones get 2.0 capacity. Low-clearance ones get a maxFootprintMultiplier cap.
3. Define your SKU footprints. A spreadsheet of sku → palletEquivalentFootprint is enough to start. You'll refine it later.
4. Run shadow billing for a month. Generate an invoice in both your current model and PE-based. Compare the numbers. Talk to your top three customers before you switch.

If you've got the right software, step 2 and 3 are config screens, not spreadsheets. Loaditude's footprint billing was built around exactly this workflow — pallet equivalents are first-class, with per-bay caps and per-SKU footprints native to the data model.

Pallet-count billing was always a proxy for floor cost. Pallet equivalents skip the proxy.