Is your product finalized and ready for the next important step of the process—packaging? If your answer is yes, then chances are you’re scratching your head trying to figure out all that business around branding, design, and most crucially, budgeting and overall costs.
Packaging is often overlooked, but the wise business owner will understand that the way a product is packaged and presented to the customer is just as important as quality. It’s the first contact your target audience will have with your brand and product. If designed strategically with visual impact and appeal, it’ll attract buyers and win them over!
So how much should you spend on functional yet visually stunning packaging? If you’re concerned that investing in quality packaging will put a dent in your wallet, worry not! We’re here to demystify the cost component of packaging design and production. By the end of this blog, you’ll have a much deeper understanding of what goes into the whole packaging process and how much you should invest to yield the greatest results for your product.
Components of packaging pricing
In terms of overall packaging costs, the typical company spends around 10-40% of the product’s retail price. But what does this seemingly intangible ‘packaging’ even mean? Well, here are a few key components that go into this umbrella term:
All the costs of these components stacked up add up to the overall packaging price.
Additionally, you’ll need to consider the fixed and variable costs of packaging in order to fully understand how the pricing works. In the following sections, we’ll go over the components of fixed and variable costs respectively.
Packaging pricing - fixed cost
These are costs incurred by the manufacturer that are constant and unavoidable, irrespective of order volume or production output. It includes:
- Machinery set-up costs
- Printing plate costs
- Mound costs
- Facility rental and upkeep costs
- …and more
The ratio of fixed costs to the number of units produced goes down as the number of units increases. Since fixed costs are constant, the larger the order volume and production output the lower the costs would be per unit.
Packaging pricing - variable cost
Variable costs are heavily influenced by production output and therefore may vary. Smaller order volumes incur less variable costs, and the opposite also holds true. These costs include:
- Material costs
- Labor wages
- Shipping costs
- …and more
If the units produced increases, the variable costs would also increase. To put things into perspective, the material required to manufacture 10 units is far less than that needed for 100 units. Therefore, the material costs would be far lower in the production of 10 units.
Next steps: get started on your packaging process
Now you may be wondering—where to begin? To save yourself from any procurement fiascos, working with a custom packaging supplier—ideally a one-stop shop—will make the entire packaging production process smooth and painless. More importantly, choosing a right one-stop packaging supplier would save you a lot of time and money in the long term! Good luck!
Partnering with the packaging supplier who treats you as a business partner
If you’re looking for a one-stop packaging supplier who cares about your business as their own, you are in the right place! At INNORHINO, we specialize in custom packaging projects that can meet your business needs. We’re always excited to collaborate with business owners like you to create memorable and on-brand packaging. So what are you waiting for? Shoot us an email today!
This article is written by: Leonni Antono – BBP
Image source: INNORHINO, Unsplash, Pexels
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