It’s easy to get excited when you find an idea you want to bring to life, but how do you know how much your packaging project will cost? You can use the following factors to calculate the overall cost of your packaging project with ease, whether it’s 100 units or 10,000 units. With this information, you’ll better understand where your money needs to go and what kind of return on investment (ROI) you can expect from your packaging project. Please read this blog article thoroughly to ensure you include all essential points.
How Much Does Packaging Cost?
If you are not a seasoned packaging solution provider, it will be tough to calculate the exact cost of your packaging. From the purchase of raw materials to the final finishing process, all aspects are a part of that calculation. Typically a retail price portion, comprising 10-40%, will be a part of the whole packaging solution.
To put it differently, if the item’s sale value is 150 Dollars, then the manufacturer might spend up to 50 Dollars on a standard packaging solution. In addition, if there is more expense on finishing or prototype sampling, then this cost might increase.
Is It Cheaper to Make Your Boxes?
Yes, it is much cheaper if you manufacture your customized boxes. However, there are many aspects one must keep in mind. Above all are the workforce and machinery costs. If you need a one-time manufacturer, the machinery and workforce will be a liability afterward. That s why we never recommend it for such users.
On the other hand, if you are a wholesaler and manufacturer, then you will use that unit for producing boxes and other solutions other than your own. In that case, the expenditure will be justified. There will be a time when the machinery cost will be subtracted from the overall cost—the same stands for the remuneration packages of the workforce and workers.
Understanding the Cost Calculations for Packaging
Packaging is vital to any business because it is how customers identify and recognize your products. To ensure you get the proper packaging for your products, you need to understand the cost calculations to know how much it will cost. One way that packaging costs can be determined is by calculating its size.
This method uses three measurements: length, width, and height. These measurements are used along with printing costs per square inch on a cardstock or corrugated material to determine how much your project will cost.
Fixed and Variable Costs for Packaging
The fixed costs for packaging do not change from project to project and can include equipment rental, raw materials, and labor. The variable costs can vary based on the size and quantity of the product. These costs include additional materials such as labels and shrink wrap. To calculate the total cost for a particular project, divide your fixed costs by your unit price (in this case, $1 per package) plus your variable costs (in this case, $0.25 per package)
How to Calculate the Overall Cost of Packaging?
Now comes the core question of our discussion. No matter what you produce, calculating the packaging cost per unit at the end will be a heavy job. However, if you keep some crucial aspects and then do it, you will think it is easier.
Our experts have brought you all the essential points in this article for your convenience. So let us check each point one by one. These tips are handy for small and large packaging business startups.
1. Choosing the Right Packaging Material
Choosing suitable packaging materials can be confusing when you’re starting. You have to decide between foam and corrugated boxes, and once you’ve made that decision, you still have to determine how many to order, which shipping company to use, and how much you’ll pay in shipping fees.
That’s why it’s so helpful to know how to calculate the cost of your next packaging project before you even get started.
2. Consider the Size, Shape, and Number of Your Product
Your product’s number, size, and shape will impact the cost. If you’re making a smaller product, buying packaging that’s already made may be more economical. Custom packaging will be cheaper if you’re making a more extensive product because you’ll use less material than purchasing pre-made products from a manufacturer.
Next, could you consider how many units you want your packaging to hold? The same stands true for their size and shape. For example, if you’re looking for a box for an item like a cupcake, you’ll need one. You’ll need twelve boxes if you’re looking for a container that can hold 12 units. All of that will make your calculation much simpler in the end.
You can also save money using recycled materials if they are readily available in your area. Sustainable cardboard is usually cheaper than the other types of cardboard, and recycled paper is usually cheaper than new paper. The quality will be better, but it will still do the job!
Factor in Shipping and Handling Costs
When calculating your total cost, you need to consider more than just the product. For example, shipping and handling costs can significantly affect your final price. To get an accurate shipping estimate, consider how many items will be in each package and their dimensions.
There are also different types of shipping. Regarding handling costs, you’ll want to include labor plus additional packaging materials (think bubble wrap and packing tape).
The more products that need packing, the more time it takes. This can add up if you have a lot of inventory! That’s why it’s always important to know how many packages will go out at once so you can accurately estimate your cost upfront.
Since 2015, I have been providing packaging expertise and coordination with product line directors, research and development departments, and production facilities.