Easy Steps of How to Reduce Packaging Costs

You want to save some expenses on your business budget. What should you do? One area where you can start saving money is in the packaging cost. Product packaging must be able to protect the goods during distribution to sale.

The demand for high-quality and sustainable packaging increases, yet choosing expensive material could be detrimental to your business development. At least reducing the cost can significantly impact your company’s bottom line. In this article, you can find several effective strategies for packaging cost cuts. 

What Is Packaging Cost?

Packaging costs are the expenditures associated with designing, producing, and delivering packaging for goods. The cost varies based on the packaging material, the sophistication of the design, the labeling requirements, and the packaging’s size, color, and shape.

In addition, other factors, including labor, transportation, storage, and printing, can influence the overall cost of packaging. The typical types of packaging include paper boxes, plastic bags, cardboard boxes, blister packs, and shrink wrap.

Besides goods’ protection, packaging plays a crucial role in establishing your business image and characteristics. Without unique packaging, customers will have difficulty knowing which product is yours.

However, packaging costs can be significant for many businesses, especially those that produce and deliver goods in large quantities. That is why it is essential to carefully consider your packaging expenditures without sacrificing the packaging quality and business performance.

How to Calculate Packaging Cost

To calculate the packaging costs for a product, you need to consider several factors, including:

• Material

Your chosen packaging material must offer the proper protection of goods without exceeding your budget. To calculate this, you need to include the cost of raw materials (paper, plastic, cardboard, etc.) and additional components (tape, foam, padding, stapler, and others).

• Supplier

You must find several suppliers and compare the prices to get a suitable material. Make a list of 3 to 6 suppliers and find out who has the best type of packaging material and offers a reasonable price.

• Design

The complexity of a packaging design affects the cost of packaging because you will need the work of a professional graphic designer. Moreover, applying one to more colors, texts, and symbols on your packaging can increase the overall expenditure.

• Printing and Labeling

Printing and labeling include the cost of printing any logos, graphics, and product descriptions on the packaging. Also, you can calculate additional information such as shipping information, product signs, weight, and size.

• Labor

If you have an in-house team manufacturing the packaging, you can calculate any labor involved in producing the packaging.

• Shipping and Handling

The cost of shipping and handling includes your whole production facility to the final shipping to your customers. 

• Overhead Costs

Consider other factors associated with producing the packaging, such as rent, utilities, and insurance. Also, you can think about other values the packaging provides, including protection, branding options, better product quality, and others.

You must calculate all factors above to get the total cost of packaging. Consider and write each expense or divide the total based on the number of produced packaging. It is essential to review and update your packaging cost calculations.

How to Reduce Packaging Costs?

There are many means to effectively reduce the cost of packaging, some of which include:

• Using Simple Design and Sustainable Material

A simple design can reduce packaging expenses if you consider using smaller logos and fewer colors. Yet, make sure the readability is still excellent. Then, standardize the overall size and shape of your packaging.

This standardization can reduce costs when you place a large material order and streamline the production process. Next is to consider using eco-friendly materials, for example, recycled materials, biodegradable, corrugated bubble wrap, or seaweed packaging.

These examples can be more cost-effective compared to traditional packaging materials in the long term. They can reduce your business waste and carbon footprint while having an appeal to customers who support sustainability.

• Working with a Packaging Supplier

This option is recommendable if you manufacture goods in bulk. Work with a suitable packaging supplier, and you may be able to negotiate the prices. Some packaging suppliers also offer discounts if you order in large quantities.

Additionally, a supplier can help you find more ways to reduce the cost of packaging that you may not have considered before. Consult with them about your packaging needs before placing an order.

• Automate Your Labeling Operations

Many small-scale businesses apply packaging labels by hand. They use stick-on labels providing variable information such as expiry date, product title and description, barcode, and many more.

These labels might be much cheaper to produce, but they cause inefficient production and shipping processes. For example, this operation requires many laborers to apply the labels. Depending on the volume of your production line, it can take hours to days to complete this task. 

Moreover, there is a high risk of human error in handling the labels, such as incorrect placement where a barcode is unscannable or does not comply with shipping and government regulations. This might mess up your entire supply chain if the issue persists for a long time.

To avoid these problems, you can invest in a thermal transfer printer to produce high-quality barcodes. The printer is suitable for large-scale operation while printing long-lasting labels. The labels are resistant to heat, fading, and moisture.

You can use a thermal inkjet (TIJ) printer for a small-scale operation. TIJ printers like Mark I Series produce high-quality graphics and images directly into your packaging. It is a cost-effective solution and can save you a lot of work and time while reducing the risk of human error.

Read About: Thermal Inkjet Printer: Benefits and How to Operate

• Improve Your Operations with an Integrated System

Using an integrated system in your packaging operation can make the process more efficient and quicker, reducing malfunctions in case of trouble. Furthermore, the system can be paired with printers to produce high-quality labels.

An integrated system refers to the interconnectivity between all software and hardware components, making the operation work seamlessly. This integration allows your business operators to access many data sources and machines through a centralized interface.

Furthermore, the process of alteration of labels can be done in a single attempt across the entire enterprise should there be changes to be made in your labels to comply with new shipping or government regulations. This will save you time while giving you more comprehensive control.

In contrast, a non-integrated system still uses printers or print-and-apply labelers. With no connection to any IT system, these manual tasks are prone to human errors and take too much time.

If your business is operating a large-scale packaging process, using an integrated system becomes a significant factor in reducing packaging costs.

• Minimize Damage by Ensuring the Goods Transportation

Online businesses must ensure their shipping transportation to minimize the damage to the product. When a customer returns a product due to defects on the box or the product breaks, it costs money and harms your relationship with the customer.

It will be worse when they leave a negative review on your online store or share the experience with friends, as it can harm your business reputation. Poor packaging and shipping damage are the two leading causes of this problem.

You can control and manage the packaging, but how can you manage the shipping issue? There is no quick way to do this, for you must select which carrier manages the most minor and damaged products. Make a list of the latter, file a complaint, or stop working with the carrier company.

• Keep Up with Packaging Industry Innovations

The packaging industry has evolved significantly over the years. It has adapted to meet the changing demands of various consumers and businesses. 

For example, more product materials are being invented to be more secure, sustainable, durable, and lightweight, especially for pharmaceuticals, cosmetics, and food industries.

Keep up with the latest innovation because they can save the cost of your packaging. Lightweight and durable materials mean having more space in your shipping transport while protecting your products from potential damage and spoilage.

Moreover, you can be a step ahead of your competitor in business if you keep an eye on the packaging trends. Examples of packaging trends include using 2D or 3D printing for design and labeling, applying robotics for packaging operation, and using the internet to identify and track your goods.

Read About: Understanding Barcode Types and the Applications

• Maintain Your System and Machinery

Using printers and robotics in your operation requires regular check-ups to avoid unnecessary troubles should the machines not work correctly. 

If you do not do this, it will cost you more money to service the machines while the packaging process is on hold. So, check regularly and ensure all machines work in the correct order. 

Reducing the packaging cost plays a significant part in maintaining your business. You can use several means to manage the packaging budget by using a simple design, sustainable material, working with the right supplier and carrier, automating the packaging operation, and others. Don’t forget to weigh each option’s costs and benefits to determine which works best for your business.