3 Packaging Costs and How to Reduce Them (Guide 2024)

• Conduct a thorough packaging audit to identify inefficiencies and waste.
• Utilize cost-effective and eco-friendly packing materials.
• Automate packaging processes to enhance efficiency and reduce labor costs.
• Regularly monitor and track packaging expenses to uncover and exploit cost-saving opportunities.

Every business owner engaged in product delivery understands the significance of high-quality packaging. It’s a crucial aspect that customers are unwilling to compromise on when making a purchase.

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For large corporations, choosing inappropriate packaging materials can result in both product damage and a negative customer experience. According to a report, manufacturers globally spend over $150 billion annually on product packaging.

Shipping costs are determined by the size, weight, and material of the package. Even small improvements in packaging can have a significant impact on shipping and handling expenses across the supply chain. Thus, selecting the right materials, redesigning packaging, and maintaining it effectively is key to reducing packaging costs.

This guide will explore effective strategies to minimize packaging costs for your business.

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Understanding Packaging

In logistics, packaging refers to a coordinated system for preparing goods to be transported safely, efficiently, and cost-effectively through the supply chain, enhancing consumer value, sales, and profits.

Packaging has the power to influence a consumer's purchasing decision because it is the first point of contact with the product. However, many businesses overlook packaging and choose standard-sized boxes. To boost sales and build a strong brand, serious attention must be given to your packaging.

Types of Packaging

The type of packaging you choose directly impacts the overall cost. Let’s examine the various packaging types commonly used in the industry.

1. Cardboard Boxes

Cardboard boxes are the most widely used form of packaging, favored by businesses of all sizes. They are durable and capable of holding heavier items, especially when combined with protective materials like bubble wrap.

While the primary purpose of shipping boxes is protection, they can also be customized with colors and designs to serve as effective branding and marketing tools.

2. Customized Packaging

Custom boxes are often designed to provide customers with a unique unboxing experience. This adds to packaging costs but also serves as an excellent branding tool.

For example, Asus ROG products come in customized packaging that enhances the customer experience.

3. Thermoform Packaging

This involves heating plastic sheets which can then be molded or trimmed to fit your product. This type of packaging includes plastic containers like meat trays, egg trays, disposable food containers, and blister packaging.

4. Paper Bags

Eco-friendly packaging alternatives, such as paper bags, help reduce the carbon footprint. These bags are recyclable, reusable, and biodegradable, making them a viable alternative to plastic. They can be customized in terms of weight, size, shape, logo, and durability, all at a low cost.

Paper bags can be reinforced with materials like woven fabric or plastics and are generally used for packaging small items such as clothes or toys.

5. Mono Cartons

Mono cartons are plain paperboard boxes used primarily as retail packaging. They can be easily customized, laminated, and printed to protect against minor impacts. For instance, Kellogg's cereal packaging is an example of a mono carton.

Understanding Packaging Costs in 2024

The cost of packaging varies depending on the type and complexity. Each packaging project includes several components that affect the overall cost. Generally, packaging costs encompass labor, raw materials, tooling, setup fees, design, prototypes, testing, shipping, fulfillment, storage, and volume.

Some packaging solutions are inherently more expensive, but ordering in bulk can decrease unit costs. This is because larger projects produce a higher volume of units at once with the packaging machine needing to be set up only once.

Packaging Type Unit Cost

Corrugated packaging

$2.7-$3.5

Folding carton

$1.8-$2.25

Rigid boxes

$8.5-$10.00

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8 Effective Strategies to Lower Packaging Costs

While the quality of your packaging is crucial as it represents your company, the goal should be to maximize your budget efficiently.

Here are eight effective ways to achieve significant savings on packaging costs:

1. Eliminate Flyers

Including flyers and thank-you notes benefits marketing, but it also increases packaging costs and time. Consider printing a thank-you message inside the product box or incorporating a hot-stamped design to reduce costs.

Alternatively, you can send a thank-you email to customers after they receive their order, showing them that you value their business.

2. Use Paper and Plastic Inserts

Paper and plastic inserts are cost-effective ways to add an extra layer of protection. This is especially useful for packaging that contains multiple items.

Add padding between products to enhance the unboxing experience. Paperboard trays, for example, are excellent for displaying cosmetics and candles, while plastic trays are particularly useful for cookies and baked goods.

3. Custom-fit Packaging

Packaging that takes up unnecessary space results in higher delivery fees. Ensure your box dimensions are precise to the product’s size.

Custom packaging eliminates the need for extra void fill, reducing both time and associated costs.

4. Order in Bulk

High setup costs are required for producing packaging boxes, which include machine cleaning, changing machine components, and more.

Ordering in smaller quantities increases per-unit costs because the machine needs to be set up for each new batch. Bulk orders reduce these setup costs significantly.

5. Reduce Printing Expenses

Custom printing for branding is alluring but can be costly. Depending on your order quantity, some printing methods may be more cost-effective.

For short runs, digital printing is more economical. Conversely, flexographic printing, which uses metal plates to stamp designs, is more cost-effective for larger volumes.

Request a digitally printed prototype and opt for flexographic printing for large orders to keep costs low while maintaining high quality.

6. Select Appropriate Materials

The right packaging materials can significantly lower costs. Many businesses (60%) choose easy-to-open packaging to enhance customer experience.

Here are some options for refreshing your branding with minimal impact on your budget:

Packaging Type

Various Options

Paper

• Plain/Customized brown paper

• Crepe paper

• Grey paper

• Oil paper

Plastic

• Drawstring bags

• Resealable pouches

• Zipper bags

Stuffing

• Bubble wraps

• Foam chips

• Styrofoam

• Silica gel

Seal

• Plastic seal covering

• Stretch foil covering

• Shrink foil covering

With a variety of packaging materials available, it's easy to manage costs while still choosing options that are both affordable and suitable for your products.

7. Automate the Packaging Process

Automating your packaging line can significantly improve efficiency and profitability. Automation replaces labor-intensive processes, saving both time and money.

The packaging industry has benefited greatly from digital and automated innovations. Routine tasks, such as carton design, box construction, inserting stuffing, and box sealing, can consume significant labor and time.

Utilize new technologies to optimize your packaging processes and prepare for bulk deliveries.

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8. Choose Reliable Software

To accurately predict shipping costs, consider the expense of shipping custom box designs and packaging from your warehouse.

Route planning software like Upper Route Planner can help you identify the most cost-effective and time-efficient routes, factoring in your manufacturer’s location and timeline.

This software can also streamline your custom packaging shipping journey and help estimate overall shipping costs.

The Importance of Packaging for Your Business

For eCommerce businesses, an efficient supply chain requires well-trained staff and various other contributing factors. Packaging quality is paramount for market success.

Let’s examine why packaging is crucial for your business:

1. Protects the Product

Packaging safeguards the product during shipments from inventory to customer. Many companies use seals and locks to ensure product integrity, meeting consumer expectations for functionality and quality.

2. Differentiates Your Product

When many businesses offer similar products, packaging helps distinguish yours from the competition.

A well-designed, eye-catching package with unique colors, fonts, and styles can make your product stand out.

3. Serves as a Marketing Tool

Packaging design encompasses more than just aesthetics; it’s a powerful marketing tool.

It helps convey your brand message and builds customer loyalty over time.

4. Creates Brand Recognition

Strong brands often share one common trait: uniqueness. Repetition in branding practices, such as consistent packaging design, encourages customer loyalty and repeated purchases.

For instance, Coca-Cola has made minor adjustments to its packaging over time while retaining its iconic look.

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Upper's optimization algorithm simplifies the route planning process, guaranteeing the timely delivery of your orders. The software makes delivery routing and planning much easier.

Upper offers numerous features for delivery drivers and couriers to save time and money. Import additional stops directly into the route planner, which then generates the quickest and most efficient routes for delivering your goods.

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FAQs

How is flexible packaging different from rigid packaging?

Flexible packaging refers to materials that can be easily shaped and altered, combining the best characteristics of plastic, film, foil, and paper. Rigid packaging, on the other hand, includes cans, plastic boxes, glass containers, and cardboard, which cannot easily change shape. While rigid packaging offers robust protection, it is heavier and usually more costly than flexible packaging.

How much should a company spend on packaging costs?

Although there isn't a specific range for packaging costs, it is wise to include these expenses in the product's cost. Typically, packaging should account for 10-40% of the product’s retail price. Identifying reliable packaging suppliers can simplify the process.

What are folding cartons?

A folding carton is a single-ply paperboard sleeve or corrugated cardboard box that has been cut, glued, folded, and scored to the desired shape. These cartons are usually shipped flat and then assembled at the manufacturing facility. They are commonly used to package food, cosmetics, electronics, and more.

What is the impact of poor packaging?

Poor or inefficient packaging can result in product damage during transit through the supply chain, leading to a negative customer experience. Additionally, ineffective packaging increases overall costs due to rework and returns.

On what factors does packaging cost depend?

The cost of packaging is influenced by several factors, including:

• Size of the packaging box
• Weight
• Type of packaging material
• Durability
• Labor costs

Conclusion

Packaging is an indispensable element of logistics. Understanding the packaging budget and selecting the right materials can help reduce warehousing and shipping costs, thus increasing your profit margins.

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A sachet is a small packet made from plastic, paper, or cloth that contains a minimal quantity of liquid or powder.

Sachets typically come in flexible, sealed bags made from various materials, including aluminum foil, paper, plastic, and cloth. They are used for small doses of products such as retail items or samples.

What is contained in a sachet?

Sachets are often used to hold liquids, powders, or pastes such as tea, coffee, detergents, shampoo, mouth fresheners, ketchup, spices, cream, lubricant, oil, sugar, and sauces.

The primary users of sachet packaging include the cosmetic & personal care, food & beverage, and pharmaceutical industries. Sachets are cheaper than larger packets and take up less storage space, making them appealing to consumers who are price-sensitive.

How Sachet Machines Work?

The packaging roll is installed on a roll mounting shaft that controls roll unwinding via sensors. Unwinding occurs on the top side of the machine, often driven by pouch-length pulling rollers. The film roll passes through a folding collar that shapes it into a tube. An attached online printer can stamp dates on the film.

During unwinding, the film remains under constant pressure for vertical sealing and pulling. Pouch length is determined by a print mark censored by a print mark sensor.

Round horizontal sealers, equipped with various cutting knife designs, handle horizontal sealing. Before horizontal sealing, products are filled into the formed tube. Different filling systems, like cup fillers for granules and syringe fillers for liquids, are used based on the product type.

Sachets can feature side seals or center seals, with three-side or four-side seal patterns, depending on market trends.

Advantages of Sachet Machines