Liberty Intercept Blog

A Look at Packaging Costs

Posted by Joe Spitz on Oct 8, 2013 8:45:00 PM

You may have seen these TV ads. The actor, dressed in black, the stubbly beard and jet black hair has him looking tough like Tony Soprano’s nephew, as he sits smugly with this legs up on the table. He kicks the competitor's bottle of vodka off the table and proclaims that his brand pours him a measured shot, while inquiring what the competitor’s brand does for him. Sticking with alcoholic products, one beer brand has some sort of a thermometer on the side of the can, in case the consumer can’t tell if it’s cold while touching it; another may have a new type of tear tab, a bigger mouth, to allow more beer to be consumed quickly.  It’s happening with most consumer products; the packaging is a greater selling point than the product inside. It appears consumers want these conveniences. In many of these scenarios, the cost of packaging is likely greater than the cost of the product it contains.

When I was first involved with packaging, selling cups and paper/plastics packaging to restaurants, it was the general consensus that 7-9% of the cost of packaging to the sell price would be considered the high end. Therefore, if the cup of coffee cost fifty cents (does anyone remember those days? I do.) then the cup and lid would need to cost the restaurant 3 to 4.5 cents. In today’s business environment, based on a study from Ohio State University: “The cost of the packaging as a percentage of total selling price varies greatly. Although this cost ranges from 1.4 percent to 40 percent, the average cost of packaging is $1 for every $11 spent. Nine percent of the amount you spend on any product is probably the cost of its packaging.” High end, indeed.

In the industrial environment in which Liberty Packaging is involved, those matrices may not be the case. Typically, packaging is not seen as an advantage or selling point, but more as an expense.  Of course, unlike the consumer products outlined above, the packaging for industrial products probably does not help sell the product.  However, a proper packaging scheme can help a packaging-conscious company in many other ways, like:

 

  • preventing unwanted returns due to product damage in transit and storage,
  • freight
  • replacement or reworks
  • travel
  • engineering time; analysis, testing, reports, explanations. What a mess that process can be!
  • savings with installation labor time, packing space, equipment, and resources
  • disposal of non-recyclable packaging,
  • replacing product degradation prevention methods, such as protective oils that are a drain to an operation with time, disposal, extra supplies, and increasing costs
  • protecting the company’s reputation when their product reaches destination and is put into service every time without problems and that attention to detail is rewarded with return orders.


View Intercept Video

Intercept Technology Packaging products fit within a sustainability strategy because they are reusable, recyclable, do not contain or use volatile components (No VOCs, Not a VCI) and leave a smaller carbon footprint than most traditional protective packaging products.  

Topics: better packaging, industrial packaging, retail packaging

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