Are you Overspending on Your Packaging? Know the Factors That Affect Packaging Costs
Packaging has become an indispensable part of product marketing. For some products, packaging just steals the limelight away from the product; whereas, for others, it adds to the user experience. Packaging for business purpose serves different functionality, where it is more about preserving the content for throughout the supply chain rather than attracting the customer. […]
Packaging has become an indispensable part of product marketing. For some products, packaging just steals the limelight away from the product; whereas, for others, it adds to the user experience. Packaging for business purpose serves different functionality, where it is more about preserving the content for throughout the supply chain rather than attracting the customer. With a lot of emphases placed on the main product itself, one can easily ignore the packaging costs. People may often feel that the packaging cost is insignificant. Although sometimes, the cost can well exceed the price of the product itself. For instance, a shower gel can cost about 10p to manufacture with the bottle itself costing three times more at around 30p. It is important to control such wasteful packaging, as it not only increases the overall price but also burdens the environment by creating waste. So it is important to be well-versed with the cost of packaging and what factors affect the final price.
Factors affecting the packaging costs
Product sensitivity and specification
It is perhaps one of the most obvious factors affecting the cost of packaging. The more sensitive the product is, the more manufacturers have to spend on packaging. There’s a direct correlation between the fragility of the product and the final packaging price. For instance, fragile products will have to be wrapped in bubble wrap, padded with thermocol, and finally be sealed inside the corrugated boxes. As a result, the packaging cost can skyrocket. Additionally, larger product will also require more packaging materials and consequently impose a higher packaging cost.
Role in supply chain
Apart from the sensitivity of the product, the packaging cost also depends on its role in the supply chain. It is essential to consider how the product moves through the supply chain, what kind of environment it will face, and the type of handling it will experience. For instance, products that go through courier networks will change hands multiple times, and it will go through numerous distribution centers, vans, and lorries. The product might be exposed to different settings and forces including impact and vibration. If the product is shipped directly to the customer, then it can do away with all those extra packagings, where primary packaging itself might be sufficient.
Apart from the materials used in the packaging to protect the items, several other factors may complicate the packaging. For instance, a simple cardboard box may have different die cut inside, which requires complicated assembly. Sometimes such elaborate packaging needs humans to fix the packaging as packaging machines might only be capable of performing simple cuts. Although complex packaging wows the consumers, it does add to the packaging cost as it requires more manual hand work. Take beer case packaging, for example, a simple beer box case is easy to package and can be done by machines itself. But for wrapping a six-pack with the handle it requires manual work which not only consumes time but also drives up the cost.
Its common sense by now that whenever items are bought in bulk, the cost per item will lower significantly. The same principle applies to packaging while ordering in large volumes as well. The reduction in cost is realized due to multiple factors such as lower machine setup time, seamless manufacturing process, less manual tasks, and ease in storage and shipping needs.
Finally, companies need to consider the role of packaging in the product’s marketing. For economical products, price may be the selling point, but for luxury products packaging needs to be elaborate. For instance, the cost will significantly increase when using multi-color print in the corrugated boxes instead of single-color black print. Additionally, using matte plastic over shiny ones will also incur extra cost.
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