What are the real costs of manual pallet production?

This text provides the answer. We break down the cost of a manually assembled pallet into its constituent factors and demonstrate how to calculate each for your own operations. We've written this for you if you're already engaged in this production or are just considering it, and want to understand what you're truly committing to. This isn't from the perspective of a machinery salesperson, but from someone who needs to input their own figures and see the result on the same day.

One note to start, because without it, the rest is misleading. There is no single “pallet price”. The calculation looks different in a plant with four pallet assemblers than in one with fourteen. A stringer pallet is calculated differently from a block pallet. Therefore, for each item, we provide three figures: minimum, average, and maximum, instead of pretending there is one true figure. As a specific reference point, we take a plant manually producing approximately 600 pallets per shift, as this is a realistic, common scale where the entire mechanism is clearly visible. All amounts are illustrative and based on prices from early 2026; the value of this method lies not in our figures, but in the fact that you can substitute your own.

Before we calculate: what will dominate this calculation

Let's start with the conclusion, so that subsequent steps fall into the correct order. When everything is fully calculated, it turns out that timber accounts for approximately four-fifths of the visible pallet cost, roughly 80 per cent. Labour is second, but significantly smaller. All the rest, including pallet nails, electricity, tool depreciation, and cleaning supplies, together amount to a few per cent, and some of these items, contrary to intuition, turn out to be literally pennies.

This has two consequences. Anyone looking for real savings must start with timber, not with nails or electricity. And the second, the real reason why it is worth calculating the whole: surprises are not in the timber, whose price everyone knows, but in the smaller items and in costs that do not have their own category at all. These, when summed, make the difference between a plant that knows how much it earns and one that only thinks it does.

Fixed or variable cost, and why volume changes everything

Before we move on to the items, one distinction that determines how to interpret all the figures below. Some costs are variable, meaning they increase directly proportionally to the number of pallets. Timber and nails are textbook examples: produce twice as many pallets, and you'll pay twice as much for both.

However, a significant portion of the cost is fixed. You pay the same for the premises whether you produce five thousand or fifteen thousand pallets per month. The compressor, nailers, supervision, and part of the staff are costs that run regardless of the actual production output. And if so, the cost per pallet decreases with volume: the more pallets over which the same fixed cost is spread, the less each unit costs.

This is why a small facility starts at a disadvantage, as it spreads the same nailers and premises over a smaller number of pallets. And this is why two companies with identical rates can have genuinely different unit costs: one simply produces more. It's worth keeping this in mind with every figure below, as they all depend on how many pallets leave the facility daily.

Cost 1. Timber, where it all begins

Every pallet calculation begins with timber, as it carries the most weight in the equation, regardless of whether the pallet is produced manually or on a line. The formula is straightforward: the price per cubic metre (including transport) divided by the number of pallets that can realistically be produced from that cubic metre for a given design.

Market prices at the beginning of 2026, for pallet-grade timber:

For lighter pallets, where well over fifty units come from one cubic metre, the same cubic metre is distributed across more pallets and costs less per unit. For heavy block pallet constructions, where the block itself is a more expensive, more processed raw material, both the price per cubic metre and consumption increase. However, the order of magnitude remains the same. This is the largest single item on the balance sheet.

Why the figure inserted into the formula can be misleading

The formula is simple, but the figure inserted into it is rarely single and constant. Timber prices change seasonally: they look different during the peak construction season compared to after harvest, when more raw material from thinning operations enters the market. A facility that calculated material cost once and applies that figure throughout the year is, in practice, calculating a cost from several months ago.

Then there's moisture content. Timber “from the forest” and seasoned timber differ in weight by more than ten percent, and since some suppliers charge by the tonne or by calculated cubic metre, moist raw material can be more expensive per unit of actually usable material, even if the price per tonne looks the same. The third factor is quality and grade: the more knots, curves, and off-cuts, the more cubic metres you need to buy to end up with the same number of good components.

Where real gains can be made here

Since timber accounts for about four-fifths of the cost, it is the only area where the fight for savings makes real sense, and yes, it can be pursued. Not through a miraculous reduction in the rate per cubic metre, but through what happens to the raw material on the shop floor: waste management and cutting optimisation. Better cutting, fewer off-cuts going to waste, conscious selection of grade for a specific construction. This is where the money is.

However, it's important to state honestly from the outset, otherwise, it would be an empty promise: this is not a move that halves the calculation. By racking your brains and truly working hard, you might reduce the 80% share to perhaps 70-something per cent, and this comes at the cost of daily, painstaking work on every cut, not a single stroke. It's worth knowing this from two perspectives: that the leverage exists, but that it is limited. Anyone expecting more will be disappointed.

How to measure this in your own operations

And one more thing, which we'll return to at the end: this timber must be purchased before the client pays for the pallets, and that's a separate cost few remember.

Cost 2. People, or much more than just the pallet assembler

Here lies the most common mistake in calculating labour costs: only the pallet assembler's remuneration is counted, and that's it. Meanwhile, before a pallet leaves the plant, it passes through the hands of several people. The forklift driver delivering material to the workstation. Someone who cuts the blocks. Someone who moves components between workstations, because the blocks are at one end of the hall and the nailing table at the other. Someone who stacks finished pallets into stacks and removes them. None of these individuals appear in the records as a “pallet cost”; they are recorded as logistics, general overhead, or anything else. Yet, without them, the pallet assembler would nail nothing. In practice, for every pallet assembler, there are usually two or three people whose job it is to ensure they can work smoothly.

What one employee truly costs

The second mistake is not about who is counted, but how much one counted person costs. Net pay, or even gross pay, is not the full cost of an employee. Employer contributions, workwear, training, and medical examinations are added. Reference point from 2026: the minimum wage is PLN 4806 gross (as of 2026), which results in a full employer cost of approximately PLN 5790 per month. But this is only the theoretical minimum, because today, a pallet assembler working for just the minimum wage is practically non-existent. The labour market in this industry is empty. Out of five applicants, only one is genuinely suitable, and to even attract anyone, you need to offer “minimum plus”. Including a realistic salary above the minimum wage, mandatory contributions, holidays, and sick leave, the full cost of maintaining one pallet assembler practically amounts to around PLN 10-12 thousand per month, not six.

Added to this are the realities whispered about in the industry: part of the market operates in the grey economy. A portion of remuneration paid outside a contract, precarious contracts, sometimes B2B settlements with manual workers. We write about this not because we encourage it - quite the opposite - but because it distorts comparisons: a company operating 'off the books' shows a seemingly lower cost, thereby undermining prices for the entire market. Those who calculate honestly compete with someone who simply does not disclose part of their costs. For example, let's assume PLN 500 paid outside the contract, with the caveat that in practice, this amount and form can vary.

Recruitment and turnover: a forgotten cost

This item may seem insignificant, so it's worth elaborating on. It's not about the owner spending a week on interviews. The point is that with a 'one in five' success rate, every unsuccessful hire still costs: someone has to issue equipment, show them what to do, prepare and sign a contract, and onboard the new person at the workstation. And then they disappear after a few days.

How many pallets one person actually produces

To translate the monthly cost into the cost per pallet, you need to know how many pallets that person actually nails. And here's the biggest surprise: output primarily depends on the type of pallet being made. A stringer pallet is the simplest case: three bearers, boards, nailing. Realistically, one person makes 300 to 400 of these per day, at a rate of about one pallet per minute. A block pallet is a different world: the process is more complex, often split among several people (one prepares the pallet bottoms, two nail, one with a long nail gun, the other with a short one), and the output per person drops by as much as half or more.

Added to this is what no spreadsheet will show: people get tired, and the first hour looks completely different from the eighth. I remember a workstation where we were commissioning a nailing machine at a customer's site. Behind it stood a person whose sole task was to collect finished pallets and stack them into stacks. After the first hour, he was already drenched in sweat, and the shift was just getting started. Looking at him, it was hard not to wonder if he would last a week at that pace, or leave after his first paycheck. I stood by that job for a while myself then, and I know one thing: it's a piece of hard, physical work, not a steady pace from morning till evening. Piecework helps because it pays for results, but it has its price: quality drops with fatigue, breaks increase, and even the best are hard to retain because such work is exhausting.

For our example plant, producing 600 block pallets per shift, with approximately five pallet assemblers and two support staff, over 21 working days, resulting in about 12,600 pallets per month, labour costs are as follows:

Labour is therefore second to wood, not first. But it increases every year, along with the minimum wage and shrinking availability of people. Wood prices rise with the market. Labour costs rise with both the market and demographics simultaneously, as fewer and fewer people are willing to do this work.

Cost 3. Absences, or two months a year without an employee

This is an item that almost no one includes in the cost per pallet, and it needs to be calculated separately and carefully, as it's easy to make a mistake either way. An employee has approximately 26 days of annual leave, plus sick leave. Together, conservatively estimated, they are simply absent for roughly two months of the year.

The key is not to count this twice. Monthly salary already includes paid holiday. You pay twelve salaries, not ten, so adding holiday as a separate monthly supplement would be a mistake. The true cost of absence only becomes apparent when we realise that you pay for twelve months, but only receive production for ten. To maintain annual output, the missing two months must be filled somehow:

Whichever route is chosen, the conclusion is the same: maintaining full production throughout the year costs more than twelve salaries, and this difference must be added to the calculation. In our example, covering absences is already included in the labour cost per pallet mentioned above.

What to do with this in practice: calculate your annual volume not over twelve months, but over ten realistically worked months, and use this rate in your calculations. If you don't do this, your cost per pallet is underestimated by more than ten percent of labour costs, every day of the year.

Cost 4. Auxiliary materials and equipment: pennies and thousands

This category is tricky because it mixes items that genuinely make a difference with those that are literally pennies. The trick is to know which is which.

Nails: a penny that grows into thousands

Nails are the best example of a cost invisible on a single item. Collated nails, used in coil nailers, cost approximately 25% more than the same nails in bulk. In figures from our first article, this is PLN 1.24 per pallet versus PLN 0.99. A quarter of a zloty difference. With 12,600 pallets per month, this quarter of a zloty amounts to over PLN three thousand, and with larger volumes, several thousand per month. A penny multiplied by volume ceases to be a penny.

Compressor electricity: let's calculate, not guess

Electricity is an item that many fear, but few have actually calculated. Let's do this using our example. With 600 block pallets and an average of 80 nails per pallet, of which about two-thirds are driven by a larger CN80-class nailer and one-third by a smaller CN55-class nailer, the plant consumes approximately 100 cubic metres of compressed air daily. A good screw compressor requires about 0.12 kWh to produce one cubic metre of compressed air, so daily consumption is more than ten kilowatt-hours. Add in an air dryer, without which such an installation cannot operate correctly, and the total energy cost per shift amounts to around PLN 20.

Three, maybe four groszy per pallet. Anyone who warns about the 'cost of electricity' for pallet assembly has never actually calculated it. The real money is in wood and people, not in the meter.

Equipment wears out, and not just one piece

Pneumatic nailers are not furniture. In demanding continuous operation, where tens of thousands of nails are fired daily and operators do not handle equipment gently, they require regular servicing, meaning seals and valves need replacing every one to two months, and the units themselves need replacing periodically. A branded tool costs between 350 and 550 euros and, with proper service, lasts several years; a cheaper alternative under the same conditions can fail in less than a year. Importantly, for an output of 600 pallets per shift, it's not just one nailer in use. There are eight to ten in rotation, including larger, smaller, and spare units. In addition, there's the depreciation of the compressor and dryer themselves.

Jigs: a cost that often cannot be calculated

Jigs are a separate case. Their cost often cannot be directly attributed because they are made from boards and blocks that the worker has on hand, and they are absorbed into ongoing labour and material costs. The real cost arises at two points: when new jigs need to be assembled (this is time that no one counts as production), and when they need to be stored somewhere. I have often seen entire piles of old jigs in plants, which no one considers a cost, but which take up space and memory, because someone needs to know where each one is. Therefore, it is worth clearly marking jigs and the material assigned to them, because disorganisation in this area is a cost that recurs with every repeat order.

Other minor costs

Workwear, cleaning supplies, and laundry services (which an employer may be obliged to provide) are all real cost items, but when calculated per pallet, they amount to pennies. It is worth listing them once as a fixed item in a spreadsheet and simply ticking them off, rather than recalculating them for every estimate.

Cost 5. Location, i.e., warehouse and tax

Production needs a location, and this also adds to the cost per pallet. Interestingly, manual production can be less „dense” than it appears. To achieve an output comparable to a single production line, multiple tables must be set up, and around them, materials, finished pallets, and clutter accumulate, which naturally occurs with a large workforce.

The calculation depends on whether the hall is rented or owned. For rental in an industrial region outside major cities, rates range from PLN 15 to 22 per square metre per month; a plant of around a thousand square metres costs more than ten thousand Polish Zloty per month, which is about one to one and a half Zloty per pallet. With an owned hall, there is no rent, but there is property tax, in 2026 a maximum of PLN 35.53 per square metre annually for a building related to business activity, plus land tax, which translates to about 20 groszy per pallet.

And here the initial distinction returns: a warehouse is a fixed cost. You pay the same for full or half production, so it only becomes cost-effective per pallet with high volume. The same floor area, if underutilised, can become a significant unit cost burden.

Cost 6. Costs without a dedicated category

Up to this point, we have calculated the cost of an efficiently produced pallet. This is still not the complete picture, as several items do not fit into any of the above categories but still appear on the balance sheet, albeit irregularly, making it impossible to distribute them evenly per unit. Some of these, namely downtime, complaints, HR risk, and safety, were discussed in more detail in the first article of this series (Why companies lose money through manual pallet production: 5 common mistakes), so here we will only recap them and add one that is rarely mentioned.

These items are calculated separately, on a monthly or quarterly basis, and treated as a distinct line in the budget, not as part of the unit cost

Manual production is the most flexible form

Before we combine everything into a single figure, a fair point in the other direction, because this article is not meant to praise or dismiss anything, but simply to calculate. Manual production has an advantage that no cost calculation can capture: it is the most flexible form of production that exists. A person adapts immediately. A series of twenty pallets that you will never make again is worth nailing with a tape measure on the nailing table, without preparing a jig. For simple changes, such as one more board or a different top deck dimension, the operator reacts instantly. Modern machines can also be flexible, to a certain extent, but never as much as a human, and that needs to be stated directly.

This is most evident not where flat pallets are produced in series, but where the product is three-dimensional and non-standard. In factories that assemble crates only at the client's site, stands for glass and windows, or large three-dimensional structures, the flexibility of manual work is irreplaceable. With such a product range, cost calculation becomes different, which we will discuss shortly.

Let's combine this into a single pallet cost

Let's summarise all steps for our example plant: 600 block pallets per shift, about 12,600 pallets per month. The figures are examples; the sense lies in the proportions.

Two things stand out. Timber accounts for approximately 80% of the visible cost, with the entire rest of the list fitting into the remaining fifth. And secondly: apart from labour and the warehouse, everything else amounts to pennies. This does not mean that pennies do not count; it simply means knowing which costs multiply into thousands (nails) and which remain negligible (electricity). To this figure, the costs without a dedicated category from Cost 6, including frozen capital, must be added separately. These, rather than the unit cost alone, most often determine whether a factory is genuinely profitable.

How this changes for other pallet types

The above example represents one specific profile: block pallets, high volume, single shift. Simply changing the pallet type will shift the figures, and not proportionally. A plant producing stringer pallets uses different timber and has a significantly higher output per person (300 to 400 units per day instead of a fraction of that for block pallets), so labour costs per pallet decrease, but the pallet itself is also different. A smaller company with four people will spread fixed costs, hall, and equipment over a smaller number of pallets, so its unit cost in these items will be higher, despite identical rates.

Here's an important caveat, so that no one treats the table as gospel: the more types, and especially the closer to non-standard pallets, the less it can be calculated in advance. For crates, stands, and structures made for a single order, there is no stable „cost per metre”, because each structure is different. The only fair method there is to calculate the cost per specific order, rather than averaging across the entire product range. The table above is a starting point, not a template that fits every facility.

Summary

The real cost of a pallet is not a single figure from a supplier's brochure or a single line in a spreadsheet. It consists of wood, which dominates and where the only sensible leverage points are waste and cutting optimisation; of full labour costs, not just the pallet assembler, but everyone whose hands the pallet passes through; of auxiliary materials, where some pennies grow into thousands, and others remain pennies; of space; and of costs without their own category, with capital frozen in wood being paramount.

If the thought occurred to you „I've never calculated it this way”, that is precisely error number one from the first article in the series: decisions made on an „approximate” basis. It's worth sitting down and calculating it properly, with your own figures.

To ensure this calculation doesn't start from building a spreadsheet from scratch, we have incorporated the same method into a simple pallet cost calculator. Enter your own timber price, rates, volume, and pallet type below, and it will calculate the cost per unit exactly according to the steps in this text.

One final note: the figures used above are as of 2026 and will need to be updated over time, as minimum wage, timber, and energy prices change. The method itself remains the same, regardless of how these prices shift.

There is one thing we deliberately did not do in this text: we did not compare manual with machine costs. This question deserves a separate, honest calculation, i.e., how much of that one-fifth of the cost, which is not wood, could realistically be cut, and how much could not, and from what volume it becomes viable at all. This will be the subject of the next article in the series, “Comparison of manual and automated production costs”. Separately, we will also look at the stacking and palletising of pallets themselves, as this is a cost we have only briefly touched upon here, but one that can be surprising.