You don’t just have to pay for a box to get its packaging. A business must consider printing, design, packing time, storage, handout and damaged items. These little expenses can easily pile up particularly if you’re packing hundreds or thousands of items.
Don’t forget to include the basic packaging costs; your final product cost may be incorrect. That can impact your profitability, your pricing and even your supplier selection.
I’m going to divide up the major expenses associated with packaging and offer a simplified method of figuring them out.
Let’s get started.
How much does packaging cost?
The price of packaging varies with each product. A simple ‘label’ or pouch can be inexpensive while a custom printed box with logo, special finishes or a really durable protective material can be costly.
The final price is affected by the material, size, print, design, order quantity, labor, shipping and storage.
For example, imagine you sell 1,000 skincare bottles online. You buy cardboard boxes for $250, printed labels for $480, protective inserts for $100, tape and fillers for $70 and pay $150 for labor to pack the products. Your total packaging costs become $1050.
Follow the basic formula:
Total Packaging Cost ÷ Total Number of Units = Packaging Cost Per Unit
$1050 ÷ $1000 = $1.05 per item
This means packaging adds $1.05 to the cost of each skincare bottle. If you ignore this cost while setting your price, your profit may become lower than expected. That is why it is better to calculate packaging cost before placing a bulk order.
The table below gives a simple idea of what each cost type includes and how much it may roughly add:
| Cost Type | What It Includes | Average Cost |
| Material Cost | Boxes, bags, labels, inserts, fillers | $0.10–$1.00+ per unit |
| Design and Printing Cost | Artwork, printing, finishes, branding | $0.05–$0.50+ per unit |
| Production Cost | Cutting, folding, tooling, setup | Varies by design |
| Labour Cost | Packing, sealing, labelling | $0.05–$0.50+ per unit |
| Shipping and Storage Cost | Delivery weight, size, storage space | Varies by weight and space |
| Return and Damage Cost | Repacking, replacements, return shipping | Depends on damage rate |
| Hidden Costs | Delays, changes, extra handling | Case by case |
What factors are included in packaging cost?
The packaging cost may vary with different products. A small box of skin care products and a heavy electronics box will not be the same cost since each box will require different materials, printing and protection.
The following factors are all part of packaging costs:
1. Packaging Size
The larger the box, the more material and space is required in the shipping process. If the box is bigger than the product, additional fill up may be required too. Selecting the correct box size minimizes waste and helps to keep the cost of delivery down.
2. Material Choice
Cost is directly related to material. Paperboard typically offers lower cost of products. Rigid boxes, strong corrugated board or eco-friendly material can recoup the extra expense. The selection depends upon product weight, safety requirements and the product look.
3. Design Style
Simple packages tend to be less costly to produce. The creation of custom shapes, special folds, inserts, windows or luxury style boxes is more complicated and will require more time and possibly additional tools. These details can boost prices.
4. Printing and Finishing
The cost of packaging is reduced with plain packaging compared to full color printed. Other finishes such as embossing, matte or gloss coatings or foil stamping increase the costs. These options can be helpful for branding but should only be used where they are helpful.
5. Labor and Packing Time
Some package materials have a short packaging time. Other packaging requires wrapping, folding, hand assembling and labelling. With more labor and more delays in preparing individual orders, the more expensive it is.
6. Shipping and Storage
If the packaging is very expensive or too large, it can also increase delivery costs. An increased need for storage space with bulk packaging orders may also be necessary. Bulk purchasing can result in a higher cost for storage, even though units may be cheaper per item.
7. Order Quantity
Set up costs are generally shared among larger orders, contributing to lower per-part costs. If your product size, design/branding changes later, buying too much product can be hazardous.
Step by Step Packaging Cost Calculation
Start with the main cost first and then add the smaller costs that are easy to miss:
- Start with material cost: If you use boxes, pouches, labels, inserts, tape, fillers, padding, etc to pack your product, count them all.
- Add design and printing cost: Logo design, artwork, color printing, labels, sleeves, embossing, matte finish, gloss finish and any other print jobs that may be associated with the design.
- Include production and setup cost: Factor in cutting and folding, gluing and molding, dielines, tooling, machine setup and quality checks.
- Add Labor and Assembly Cost: Examine box size, material weight, dimensional weight, shipping, bulk stock and warehouse space.
- Calculate Shipping and Storage Cost: Check box size, material weight, dimensional weight, delivery method, bulk stock and warehouse space.
- Include Hidden Cost: Do not overlook damaged product replacements, return shipping, repacking, wasted material, supplier delays and packaging upgrades.
Note: Custom shapes, premium finishes, heavy materials and oversized boxes can all increase the total packaging cost.
How to reduce packaging cost without losing quality?
You can lower packaging costs by choosing smarter sizes, materials and designs while still keeping the product safe.
- Use the right box size: Ensure that the box is the right size for the product and minimise the need for filler.
- Choose smarter materials: Buy in bulk, thereby decreasing the cost per piece.
- Buy in Bulk: Order larger quantities to reduce the cost per piece.
- Save Packing time: Make more purchases at the same time to get more of a discount.
- Keep Design Simple: Use clean printing instead of expensive finishes.
- Order Samples First: Test the packaging before buying in bulk.
Packaging Mistakes that are Costing you Money
Some packaging costs because brands continue to use old packaging designs or they select packaging without looking at its storage, shipping and handling capabilities. Here are the packaging mistakes that cost you more:
- Using old packaging for too long: Old design may use more materials, take up extra space and increase delivery costs. Review your packaging every few years.
- Using too much packaging: Oversized boxes and unnecessary layers add weight and waste materials. Use only the protection your product needs.
- Skipping Package Testing: Poor packaging can result in product damage, return and repack expenses. Test samples prior to bulk production
- Ignoring Shipping and Storage: Bulky boxes use more warehouse, pallet and truck space. Better sizing can reduce these costs.
- Using only one package size: A single size may not suit every order or retailer. Offering different sizes can reduce empty space and improve flexibility.
Frequently Asked Questions
How do you calculate packaging cost per unit?
Calculate all packaging related costs and divide the total cost by the number of items packaged.
Formula for calculation is:
Total Packaging cost / Total number of Units = Packaging Cost per Unit.
What costs should be included in packaging cost?
Material cost, design cost, printing cost, production cost, labour cost, shipping cost, storage cost and any cost spent on return and damage materials should be incorporated.
Why is packaging cost important?
The price of your packaging affects your product price and profit margin. If you don’t get this part right, you could end up selling the product at a lower profit than you’re looking for.
How can businesses reduce packaging cost?
The trick for businesses to save on packaging is to select the correct box size, eliminate the need for inserts, select lighter materials, purchase boxes in bulk and maintain a simple design.
Does custom packaging cost more?
Yes, custom packaging normally comes with a higher price than standard packaging since it can involve setup fees, printing, finishes, inserts or special sizes.
