What Does Your Packaging Really Cost?
A cardboard box costs €0.80. The protective packaging costs €0.22. Add a few cents for tape.
So, we know the cost of the packaging.
Right?
Not quite.
The purchase price of the packaging material is only the most visible part of the equation.
Packaging needs to be ordered, delivered, stored, brought to the packing station, processed and, in some cases, disposed of later. Employees spend time handling it. And if the packaging fails to do its most important job, it can lead to damaged products and returns.
So, if you really want to compare packaging solutions, you should not look at material costs alone.
You should look at the Total Cost of Packaging.
The Real Packaging Cost
In simple terms, the calculation looks like this:
Material
+Packing time
+Procurement
+Storage
+Disposal
+Damage / returns
+Handling
+Capital tied up in stock
= Total Cost of Packaging
Not every cost factor is equally important for every company.
But that is exactly what makes this approach useful.
1. Material: The Most Obvious Cost
This is the cost almost every company knows.
Boxes, protective packaging, film, paper, tape, mailing bags.
Material prices are easy to compare – which is why purchasing departments often focus on them.
But a price of €0.20 per metre, for example, tells you very little about how much material is actually needed for one finished package.
So the important question is not only:
“How much does one metre cost?”
But rather:
“How much does the packaging material cost per fully packed unit?”
2. Packing Time: 30 Seconds Is Not Much – Until You Repeat It 10,000 Times
Collect the material. Unroll it. Cut it. Wrap the product. Secure it. Add protective filling.
Each individual step may take only a few seconds.
But at higher volumes, those seconds quickly turn into hours.
That is why packaging that costs slightly more to purchase can still be cheaper overall if it removes several manual steps.
One example is pre-made Honeycomb Paper Sleeves for bottles or other fragile products.
Instead of cutting packaging material to size and wrapping it around each product, the right-sized sleeve is simply pulled over the item.
The important figure is therefore not just the price of the sleeve.
It is the time needed to fully pack one product.
3. Procurement: Ordering Costs Money Too
Packaging materials do not order themselves.
Consumption needs to be monitored, stock levels checked, orders placed, deliveries received and invoices processed.
The more different materials a packaging process requires, the greater this indirect workload can become.
A solution that combines several materials or process steps can therefore be attractive even if the direct material savings are relatively small.
4. Storage: Air Takes Up a Surprising Amount of Space
Packaging materials often have one inconvenient characteristic:
They are bulky.
Protective filling, ready-made cushioning materials and large rolls require warehouse space as well as space directly at the packing station.
That space can no longer be used for other materials or activities.
For larger volumes, it is therefore worth asking:
Does the packaging material really need to be stored in its finished form – or can it be produced where and when it is needed?
This is where on-demand packaging solutions can become particularly interesting.
5. Disposal: The End of a Material Also Has a Cost
Material enters a company.
At some point, it leaves again.
And between those two points, it may create additional costs.
Cardboard boxes, for example, arrive with incoming goods, are unpacked, collected and eventually disposed of.
Things become more interesting when some of this material can be used again.
This is the idea behind the CartonJet, for example: suitable used cardboard can be processed into protective packaging material for the company’s own shipments.
This changes the cost calculation in more than one area:
Less cardboard needs to be disposed of, while potentially less external protective packaging needs to be purchased.
6. Damage and Returns: The Most Expensive Packaging May Be the Packaging That Does Not Work
Packaging should help reduce costs.
But its most important job is still to protect the product.
A solution that saves a few cents but results in more damaged products is rarely the more economical option.
Because the cost of damage goes far beyond the value of the product itself.
It may also include:
processing the complaint
replacement shipping
repackaging
return shipping
employee time
potentially losing a customer
Product protection should therefore never be considered separately from price.
7. Handling: How Well Does the Solution Work in Daily Operations?
Some packaging solutions look excellent on paper – but do not work nearly as well at the packing station.
Materials need to be found. Rolls need to be changed. Products come in different sizes. The workspace becomes cluttered.
This is exactly why a practical test can often tell you more than a simple price comparison.
Even the best theoretical solution has limited value if it is inconvenient to use in everyday operations.
8. Capital Tied Up in Stock: Packaging Does Not Sit on the Shelf for Free
Large order quantities can offer attractive unit prices.
But they also mean one thing:
The material has already been paid for – and is now sitting in the warehouse waiting to be used.
The larger the stock level, the more capital is tied up.
This is not necessarily a problem. If consumption is regular and predictable, ordering larger quantities can make perfect sense.
But it is still a factor that belongs in the overall calculation.
Why the Lowest Unit Price Is Not Always the Cheapest Solution
Let us compare two packaging solutions.
Solution A: Material cost: €0.35Packing time: 90 seconds
Solution B:Material cost: €0.48Packing time: 45 seconds
Looking only at the purchase price, Solution A is clearly cheaper.
For 10,000 packages, the material cost advantage is: €1,300
At the same time, however, Solution A requires an additional 125 working hours in this simplified example.
Suddenly, the decision is no longer quite so obvious.
And we have not even included storage, handling, damage or procurement yet.
That is why the unit price matters.
But it is not the whole equation.
A Better Question for Your Next Packaging Comparison
The next time you compare packaging solutions, do not just ask:
“How much does the material cost?”
Add five more questions:
How much material do we need per package?
How long does it take us to pack one shipment?
How much space does the solution require?
What additional process steps does it create?
And what does the entire process cost us per shipped unit?
This turns a simple price comparison into a real business decision.
From the Cost Model to a Practical Example
The Total Cost of Packaging helps companies evaluate their packaging processes in a more structured way.
It becomes particularly interesting when several of these cost factors come together in one specific application.
Our CartonJet cost example shows how several of these factors can influence the economics of a packaging machine at the same time. Stay tuned - it will be posted next week.
If you would first like to take one step back:
Our introductory article explains why packaging should be viewed as an economic process rather than simply as a material cost. Read here.
Want to Estimate Your Total Cost of Packaging?
You do not need a weeks-long process analysis to get started.
With just a few details about your shipping volume, the packaging materials you currently use and your existing process, it is often possible to identify where relevant costs arise.
We would be happy to look at your packaging process together and explore which solution fits your needs – with or without a machine. Your contact options you find under contact.
SelectPack – Packaging Made Simple.
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