True Cost of Product Packaging

Product packaging is an essential element of any business that sells physical goods. It protects products during transport, provides important information to consumers, and helps products stand out on store shelves. The true cost of product packaging is often much more than just the price of the materials used to create it. Packaging costs can add up quickly and significantly impact a company’s bottom line.

Brands must better understand how packaging costs can impact their business and how they can reduce their costs without sacrificing quality. This infographic provides an overview of the cost of product packaging, the factors that affect packaging costs, and tips for reducing packaging costs while still making the most of your packaging.

THE AVERAGE COST OF PACKAGING

Packaging costs can vary widely based on factors such as the size and weight of the product, the type of packaging materials used, and the production process. Businesses need to understand the average cost of packaging to make informed decisions about their packaging solutions.

On average, packaging costs can account for at least 10% of a product’s retail price. However, the actual cost can vary widely depending on the product and its packaging requirements. The cost of packaging materials is also a major component of overall packaging costs.

Here are some examples of the average unit cost of common packaging types:

Corrugated packaging – $2.7-$3.5
Folding carton – $1.8-$2.25
Rigid boxes – $8.5-$10.00
Flexible packaging – $0.25-$0.75 (based on 5,000-25,000 units)

It’s important to note that these are general estimates, and the actual cost of packaging can vary widely depending on the specific requirements of each product. For example, custom packaging designs, high-quality materials, or specialized packaging solutions may come at a higher cost.

In addition to the direct cost of packaging materials, there are indirect costs to consider, such as storage, transportation, and environmental impact. By understanding the average cost of packaging and its associated costs, businesses can better choose packaging solutions that meet their budget and sustainability goals.

FACTORS THAT AFFECT PACKAGING COSTS

Many different factors can impact the cost of packaging. Some of the most common factors include:

1. TYPE OF MATERIAL

Different materials have different costs associated with them, with plastic typically being less expensive than paper. Glass is also a common packaging material but can be more expensive due to its weight and fragility. Additionally, sustainable packaging materials, such as biodegradable or compostable materials, may be more expensive than traditional materials.

2. QUANTITY

The quantity of packaging required is another significant factor in determining the cost of packaging. Typically, the more packaging that is needed, the higher the cost will be. However, many manufacturers offer bulk pricing discounts for larger orders, which can help to reduce the cost per unit.

3. CUSTOMIZATION

Custom-designed packaging will generally be more expensive than pre-made, off-the-shelf packaging. This is because custom packaging requires additional design work and production time. Factors that can impact the cost of customization include the complexity of the design and the level of detail required.

4. PRINTING

Printing on the packaging, such as branding or product information, can add to the cost of the packaging. Factors that can impact the cost of printing include the number of colors used in the design, the size of the packaging, and the type of printing technology used.

5. SHIPPING

The cost of shipping the packaging materials and the finished products can significantly affect the overall packaging costs. Factors that can impact shipping costs include the weight and size of the packaging, the distance between the manufacturer and the customer, and the shipping method used.

6. REGULATORY COMPLIANCE

Some products may require specific types of packaging to comply with safety or environmental regulations, which can increase the cost of the packaging. For instance, products that are considered hazardous may require special packaging materials to prevent leaks or spills during transport.

7. SUSTAINABILITY

Sustainability is becoming an increasingly important factor in packaging costs. Sustainable packaging materials such as biodegradable or compostable materials, may be more expensive than traditional materials. However, sustainable packaging can also provide cost savings in other areas, such as reduced shipping costs due to lower weight.

By understanding these factors, businesses can start to identify areas where they may be able to reduce their packaging costs. They may be able to reduce the cost of printing by using simpler designs, or they may be able to reduce shipping costs by sourcing materials from a closer location.

5 STRATEGIES ON HOW TO REDUCE PACKAGING COSTS

Reducing packaging costs is an important goal for any business looking to improve profitability, reduce waste, and enhance sustainability. Here are some effective strategies for lowering packaging costs without sacrificing quality or effectiveness:

1. REDUCE THE SIZE AND WEIGHT OF THE PACKAGING

One of the most effective ways to reduce packaging costs is to reduce the size and weight of your packaging. This can be achieved by using thinner or lighter materials or redesigning your packaging to be more compact and efficient. By reducing the size and weight of your packaging, you can save on material, shipping, and storage costs.

2. USE ECO-FRIENDLY AND SUSTAINABLE MATERIALS

Many businesses use eco-friendly and sustainable materials, such as recycled paper, biodegradable plastics, or plant-based materials to reduce packaging costs. These options are often more cost-effective than traditional materials, especially in the long run.

3. OPTIMIZE SHIPPING AND HANDLING PROCESSES

Efficient shipping and handling can significantly reduce your packaging costs. Consider using standardized packaging sizes, automating your packing and shipping processes, and working with logistics partners to optimize your shipping routes and schedules. By streamlining your shipping and handling processes, you can reduce labor, shipping, and material costs.

4. MINIMIZE DESIGN AND PRINTING COSTS

Custom packaging design and printing can be expensive, especially for small businesses. Consider using pre-designed templates or simplifying your packaging design to reduce costs. You can also negotiate with printing vendors or consider in-house printing options to reduce costs further.

5. PARTNER WITH PACKAGING SUPPLIERS

Working closely with suppliers can allow businesses to negotiate better pricing, access bulk purchasing discounts, improve packaging quality, and streamline their supply chain for more cost-effective packaging solutions. Consider partnering with a packaging supplier that specializes in your industry or product type and has a proven track record of providing quality services.

Businesses can significantly reduce their packaging costs while providing quality packaging that protects their products and enhances their brand image. It’s important to remember that lowering packaging costs should not come at the expense of quality or effectiveness. By finding the right balance between price and quality, businesses can achieve the optimal packaging solution that meets their needs and helps them achieve their goals.

HOW TO MAXIMIZE THE VALUE OF PRODUCT PACKAGING

While reducing packaging costs is essential, it’s also crucial to maximize the value of product packaging to achieve the best possible return on investment. Here are some effective ways to maximize the value of product packaging:

1. ENHANCE THE CUSTOMER EXPERIENCE

Product packaging is an integral part of the customer experience. Packaging that enhances the customer experience can improve customer loyalty, increase brand recognition, and drive sales. Consider using custom packaging designs, personalized messages or branding, or unique materials that reflect your brand values and identity.

2. HIGHLIGHT PRODUCT FEATURES AND BENEFITS

Product packaging is an excellent opportunity to highlight the features and benefits of your product. Add product information or instructions, use high-quality product images, or use color and design to emphasize key selling points. By using product packaging to showcase the product’s unique features and benefits, businesses can increase customer interest and drive sales.

3. ENSURE PRODUCT SAFETY AND PROTECTION

Product packaging should also prioritize product safety and protection. With high-quality materials and packaging design that effectively protects the product from damage or contamination, businesses can reduce product loss, improve customer satisfaction, and enhance brand reputation. Utilize tamper-evident seals, protective padding or inserts, or air-tight packaging for food or perishable products.

4. SUPPORT SUSTAINABILITY GOALS

Sustainability is becoming increasingly important to customers, and businesses can use packaging to demonstrate their commitment to sustainability. Using eco-friendly materials, reducing packaging waste, and using recyclable or biodegradable packaging can attract environmentally-conscious customers and improve brand image.

5. MEASURE AND ANALYZE PACKAGING PERFORMANCE

To maximize the value of product packaging, businesses should measure and analyze packaging performance regularly. Tracking key performance indicators such as customer feedback, sales data, and packaging costs can help identify areas for improvement and optimize packaging strategies over time.

PACKAGING THAT PAYS OFF

Product packaging costs extend beyond the direct expenses of packaging materials and production. Businesses must also consider the indirect costs, such as storage, transportation, and environmental impact. Implementing effective packaging strategies prioritizing cost savings and value maximization can help your brand achieve optimal packaging solutions that benefit your bottom line, customers, and the environment.

It’s time to optimize your product packaging and achieve cost savings while enhancing your customers’ experience. Talk to Meyers experts to learn how we can help you design, produce, and manage custom packaging solutions that meet your business’s unique needs.