When trying to determine the cost of packaging their products, most companies only consider the cost of purchasing packaging materials like boxes and tape. However, the price of these elements only accounts for about 15% of the total cost of packaging.
But if material costs only represent 15% of packaging expenses, where does the additional 85% of costs come from?
Here are some answers to this question.
The labour required to pack the products
Although most packaging companies can rely on automated equipment, some operations still have to be carried out by salaried workers.
Moreover, some warehouse handling operations are also carried out by employees. It is therefore beneficial for the packaging to be easy to handle and place on loading pallets, thereby reducing the effort and time required to complete these operations.
In summary, the more labour is required to pack and handle a product, the higher the total invoice will be.
Storage costs related to packaging materials and packaged products
In order to have enough raw materials on hand at all times, packaging companies need to maintain a large inventory of cartons, crates, plastic wrap, etc. In addition, newly packaged products must also be stored on site before shipping.
In short, it takes a lot of space to store everything. The cost of this space, plus heating and monitoring costs, will of course increase the total packaging cost.
The product packaging sector is closely linked to the logistics and freight transport sector. In many cases, packaged products will subsequently be shipped to their destination by truck, boat, train or plane. This transport naturally has a cost that varies according to the total number of items and is added to the final amount.
However, it should be noted that the weight and volume of the packaging being used will also have an impact on transport costs, especially in the case of goods transported by air.
The cost of returns
A lower performance protective packaging will increase the number of goods returned due to breakage and therefore the rate of customer dissatisfaction. This is why a packaging designed to protect a given product is often considered an investment!
Moreover, in some cases, an ROI analysis of reusable packaging can be more profitable for the company.
The cost of packaging disposal
In some countries, the cost of disposing of non-recyclable packaging can be high and should be considered in the equation.
It goes without saying that reusable, recyclable or biodegradable packaging is in demand.
Creopack: the right partner to reduce your packaging costs
In conclusion, you no doubt understand that the cost of packaging material is only the tip of the iceberg when you factor in the total amount of the invoice to be paid for a packaging company’s services.
On the other hand, an in-depth analysis of your needs and products carried out by the Creopack team makes it possible to offer a solution that reduces the total cost of packaging products based on physical, budgetary and/or logistical constraints.
Contact Creopack today to reduce your packaging costs.