Distribution Center ROI Calculator — New DC Investment Analysis

Calculate the ROI of opening a new distribution center. Freight savings from shorter lanes, improved service levels, and operational efficiencies versus DC capital and operating cost.

Quick answer: A regional DC (100,000 sq ft) costs $2M–$5M to set up and $1M–$2M/year to operate. Freight savings at 500K+ packages/year typically exceed DC cost within 2 years. Model at your volume.

🏭 Distribution Center ROI Calculator

Annual Freight Cost Saving ($)

From zone reduction (use Zone Optimization Calculator)

Annual Service Improvement Value ($)

Incremental revenue from faster delivery capability

DC Setup Cost ($)

Leasehold improvements, racking, equipment, WMS

Annual DC Operating Cost ($)

Lease + labour + utilities + systems

Added Inventory Carrying Cost ($)

Ramp-Up Period (months)

DC Payback Period

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Annual Benefit

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Annual DC Cost

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How to Use This Calculator

Use Zone Optimization Calculator first — to calculate the freight saving from zone reduction — this is the primary ROI driver.
Model service value — same-day/next-day capability from a regional DC can drive incremental revenue — estimate conservatively.
Include all DC costs — setup (leasehold, racking, WMS, equipment), annual operating (lease, labour, utilities), and added inventory carrying.

Worked Example

$2.4M freight saving, $400K service value, $3.5M setup, $1.8M operating, $250K inventory.

Annual benefit: $2,800,000
Annual cost: $2,050,000
Annual net: $750,000
Payback: $3.5M ÷ $750K = 4.7 years

4.7-year payback for a strategic DC investment is reasonable. Factor in property appreciation (industrial real estate has been strong), reduced customer churn from faster delivery, and long-term competitive positioning.

Frequently Asked Questions

Use the Warehouse Lease vs Buy Calculator to model this. For most e-commerce operations: lease for the first 3–5 years to validate the location before committing to purchase. Buy once you've confirmed the DC will operate long-term — industrial property has appreciated 8–15%/year in major markets recently.

Small DC (30,000–50,000 sq ft): $500K–$1.5M. Mid-size (75K–150K sq ft): $1.5M–$4M. Large (150K–500K sq ft): $4M–$15M+. Racking: $8–$12/sq ft. WMS: $50K–$300K. Conveyor/automation: adds significantly. Leasehold improvements: varies widely by building condition.