Ultimate Guide to Reducing Packaging Costs in 2024

Every delivery business owner knows the importance of high-quality product packaging. Packaging is an aspect where the customers do not want to compromise while purchasing. 

For big companies, choosing the wrong packaging materials can lead to both product damage and a bad customer experience too. According to a report, manufacturers spend more than $150 billion yearly on product packaging.

The size, weight, and material of the package determine shipping costs. In this manner, a small improvement in packaging can make a critical impact on shipping or handling costs throughout the supply chain. So, picking the appropriate material, redesigning packaging, and maintaining packaging play a vital role in pulling down the packaging costs.

In this article, we will learn how to reduce packaging costs for your business.

So, let’s get started.

What is Packaging?

In logistics, packaging refers to a coordinated system of preparing goods for safe, cost-effective, and efficient movement throughout the supply chain, resulting in increased consumer value, sales, and profits.

Packaging has the potential to influence a buyer to initiate sales because the buyer comes into contact with the package first and then with the product. But, many businesses overlook packaging and opt for a standard size box. So, businesses should take their packaging seriously if they want to boost their sales and build the brand.

Understanding Packaging Costs

Reducing packaging costs is essential for businesses looking to optimize their operations and improve profitability. To effectively manage packaging expenses, it’s important to understand the key cost components and factors that impact them.

Key cost components

Packaging costs can be broken down into two main categories: fixed costs and variable costs.

Fixed costs breakdown

Fixed costs are expenses that remain the same regardless of the production volume. These include:

• Machinery and equipment maintenance
• Facility overhead (rent, utilities, etc.)
• Salaries for dedicated packaging personnel

Variable costs analysis

Variable costs fluctuate based on the production volume. Examples of variable packaging costs include:

• Raw materials (e.g., cardboard, plastic, labels)
• Packaging labor
• Shipping and transportation

Understanding the breakdown of these fixed and variable costs will help you identify areas for potential savings.

Types of packaging

Aspect	Cardboard Boxes	Customized Packaging	Thermoform Packaging	Paper Bags	Monocartons
Material	Cardboard	Various materials (cardboard, plastic, etc.)	Plastic	Paper	Paperboard
Usage	General shipping, storage	Unique product presentation, branding	Food, electronics, blister packaging	Retail, small items	Retail
Cost	Moderate	Higher	Moderate-high	Moderate	Moderate
Customization	Moderate	High	Moderate	High	High
Durability	High	Varies	High	Moderate	Moderate
Sustainability	Moderate	Varies	Moderate	High	Moderate
Branding	Moderate	High	Moderate	Moderate	Moderate
Examples	Amazon packages, shipping boxes	Apple products, luxury goods	Meat trays, blister packs	Grocery bags, gift bags	Kellogg’s cereal boxes

The type of packing you choose has the biggest impact on the packaging cost directly. So, let’s look at the various packaging types used in the industry.

1. Cardboard boxes

Cardboard boxes are the most common forms of packaging, preferred by both large and small businesses. The boxes are sturdy and long-lasting that can frequently accommodate heavier items. Boxes can withstand the rigors of transportation when combined with bubble wrap until they arrive at their destination.

Although the primary purpose of the shipping box is protection, you can customize boxes with colors and styles to serve as a branding and marketing tool for your business.

2. Customized packaging

Custom boxes are frequently designed to provide customers with a unique unboxing experience. The range of custom packaging adds to extra packaging costs. It works as an excellent branding tool.

For instance, Asus ROG products come in unique packaging, enhancing the customer experience.

3. Thermoform packaging

It involves heating plastic sheets so they can be easily molded or trimmed depending on your product. It includes plastic containers such as meat trays, egg trays, disposable food containers, and blister packaging.

4. Paper bags

Eco-friendly packaging can help to reduce the carbon footprint. Paper bags are recyclable, reusable, and biodegradable, which makes them a viable alternative to plastic bags. Paper bags can be highly customized, with any weight, size, shape, logo, or strength, at a low cost.

To strengthen paper bags, you can laminate them with other materials, such as woven fabric or plastics. They are generally used for packaging small items such as clothing, toys, etc.

5. Monocartons

Mono Cartons are plain paperboard boxes. Mono Cartons are used as retail boxes because they can easily be customized, laminated, and printed. They also protect against minor splashes, drops, and bumps. For example, Kellogg’s cereal comes in mono cartons.

Cost impact factors

Several key factors can significantly impact packaging costs. Addressing these factors can lead to substantial cost reductions.

1. Material selection

The type of packaging material used can greatly affect the overall cost. Exploring alternative materials, such as recycled or eco-friendly options, can often result in significant savings.

2. Production volume

Economies of scale come into play when it comes to packaging costs. Increasing production volume can lead to lower per-unit costs for materials, labor, and transportation.

3. Design complexity

Complex packaging designs can increase production time, material usage, and logistics costs. Simplifying the packaging design can help reduce these expenses.

By understanding these fundamental cost components and impact factors, you can develop a strategic approach to optimizing your packaging costs and improving your bottom line.

9 Proven Strategies to Reduce Packaging Costs

The package’s quality is important because it physically represents your company. The goal, however, should be to save and maximize the available budget. 

We’ve compiled eight effective ways that can help you get significant cost savings on your packaging.

1. Remove unnecessary inserts

While including flyers and thank you notes benefits your marketing department, it increases your packaging costs and takes time to incorporate them into each other.

You can remove these elements and instead consider printing a thank you message inside your product box or incorporating a hot-stamped design to lower the packaging costs.

Also, after a customer receives their order, you can send them a thank-you email, which shows that you value your customers.

2. Use paper and plastic inserts

Paper and plastic inserts are inexpensive ways to add an extra layer to your packaging. This is especially useful for boxes that contain several products. It acts as a cost-effective packaging solution.

You can enhance your unboxing experience by placing padding between the products and/or appealingly displaying them.

Paperboard trays are great for displaying items like cosmetics, candles, and much more because they provide extra support and protection to your products.

Whereas plastic tray inserts are especially useful for cookies and baked goods because they separate your products within a single vessel.

3. Use custom packaging solutions

The more space your package takes, the higher will be the delivery fees. It is not a good idea to send a package that takes up more space than it should. Your box’s dimensions should be determined by your product’s length, width, and depth. 

Integrating custom packaging will eliminate extra space for void fill, reducing the time and costs associated with filling space.

4. Order packages in bulk

Setup cost is required for the production of your boxes, cleaning the machine and tooling, changing different machine components needed for cutting, dyes, etc.

Small runs will cost more per unit because manufacturers will need to set up the machine for your specifications every time you order a new batch.

Meanwhile, large-run projects can produce many units at once, only needing to set up the packaging machine once.

5. Minimize printing costs

The ability to custom print your branding draws businesses to custom packaging. Depending on the quantity of your order, you can also save money on printing.

Although both digital and flexographic printing are excellent options, depending on your volume, one of the two may be the more cost-effective custom printing solution.

For short-run projects, digital printing is the most cost-effective option.

On the other hand, flexographic printing layers color onto sheets rapidly and stamp designs directly onto the substrate using metal plates, but it is expensive for most low-volume projects.

So, the best way to keep printing costs low and packaging quality high is to request a digitally printed prototype and produce large volume orders with flexographic printing.

6. Utilize the right materials

Most of the time, choosing the right materials can help in reducing packaging costs. 60% of businesses use easy-to-open packaging, which customers prefer.

As a result, as a business owner, you must utilize a wide range of available options. Here are some ideas for refreshing your branding:

Packaging type	Various options
Paper	Plain/Customized brown paper Crepe paper Grey paper Oil paper
Plastic	Drawstring bags Resealable Pouches Zipper bags
Stuffing	Bubble wraps Foam chips Styrofoam Silica gel
Seal	Plastic seal covering Stretch foil covering Shrink foil covering

With so many different packing materials, it is simple to keep your packaging costs under control. Depending on the product, you can choose the one that is both affordable and appropriate.

7. Process enhancement

Automate the packaging processes

An automated packaging line will improve your picking and packaging process, making your business more profitable. Automation has changed the way consumers and businesses connect with each other. It has replaced the manual packaging process and adds to saving money on packaging.

The packaging industry has also benefited from digital and automated innovation. Routine tasks such as the following consume a significant amount of labor and time in most packaging operations:

• Carton design and security
• Corrugated cardboard boxes construction
• Inserting stuffing and dividers
• Box taping and security

You can improve your packaging processes by utilizing new technologies while saving time for bulk deliveries.

Workflow Optimization

Carefully analyzing your current packaging workflow can uncover opportunities for optimization. 

Look for bottlenecks, redundant steps, or areas where manual labor can be replaced with more efficient processes. Streamlining your workflow can lead to faster turnaround times and lower per-unit packaging costs.

8. Material optimization

1. Right-sizing guidelines

One of the most effective ways to reduce packaging costs is to ensure that your packaging is the right size for your products. Oversized packaging not only wastes materials but also increases shipping costs. 

By carefully measuring your products and designing packaging that fits them snugly, you can minimize waste and lower your overall packaging expenses.

2. Material alternatives

Exploring alternative packaging materials can also lead to substantial cost savings. Look for more affordable options that still meet your product’s protection and branding requirements. 

For example, you might be able to use recycled or recyclable materials instead of more expensive virgin plastics or paperboard.

9. Choose reliable software

To better estimate the shipping costs, you should consider how much it will cost to ship the custom box design and packaging based on your warehouse.

Depending on your manufacturer’s location and timeline, route planning software such as Upper Route Planner can assist you in planning the most cost-effective and time-efficient route. 

It can assist you by creating optimized routes to reduce fuel costs and ensure maximum profitability no matter how many delivery projects you handle.

Why is Packaging Crucial for Your Business?

For eCommerce businesses, well-trained staff is critical for an efficient supply chain. There are numerous factors that contribute to your product’s success in the marketplace.  

One of the most important aspects is quality packaging design. The influence of packaging on consumers cannot be neglected. Let’s look at some reasons why packaging plays a vital role in your business’s success.

1. Protects the product

Packaging protects the product during shipment between the inventory to the customer. Many companies package their products with seals and locks to ensure product integrity and safety because consumers expect their products to work as intended, and quality packaging materials is the best way to ensure that.

2. Helps you stand out from others

Many businesses offer similar products, so separating your products from the competition is highly important. 

However, a well-designed, eye-catching product with unique colors, fonts, and style can help you stand out from the crowd.

3. Works as a marketing tool

Packaging design is much more than just the appearance and feel of the package. It’s also an excellent marketing tool for your business.

You can use packaging to convey how you want customers to perceive your product or service and build brand loyalty over time.

4. Creates brand recognition

Consider some of your favorite brands; they all appear to share one trait: uniqueness. One method is repetition; these businesses want customers to return weekly or year after year as purchasing habits develop over time.

Coca-Cola has consistently made minor changes to its packaging while maintaining its original appearance.

Conclusion

Packaging is an unavoidable part of your logistics. Therefore, it is essential to understand the packaging budget. Choosing the right material and reducing the average shipment size can reduce warehousing fees and shipping costs. By doing this, you can save packaging costs and increase the profit margin of your business.

So, if you are handling any aspect of deliveries, be it logistics or last-mile deliveries. Upper Route Planner can help you streamline your delivery process. With Upper, you can reduce operational costs, minimize fuel consumption, and improve productivity. To understand more about Upper, you can book a demo now with us.