When it comes to running a business, packaging can be a real money pit, especially when you’re a small enterprise. It is often where cost-cutting measures are applied and is also one of the areas where costs can quickly spiral out of control if not managed properly. For many decision makers finding effective ways to reduce packaging costs is critical.
Think about your last online purchase. Chances are, the product arrived in some packaging, not just a plain cardboard box. Air pillows, packing peanuts, and bubble wrap ensure your purchase arrives safe and sound. While this extra protection is necessary for delicate items, it also drives up the cost of shipping.
Packaging expenses may not be on your mind when planning a small order, but as your business grows and you need to ship products with more complex or fragile packaging, it contributes to higher costs. Packaging can increase the price per item and even affect item quality.
However, you shouldn’t think about cutting down packing costs as simply trimming the fat and instead consider how to make smarter product packaging choices. Sometimes, how something gets packaged matters just as much or more than what’s inside. Take the example of Apple. Their consumers always unbox the products with great excitement even though the company doesn’t use over-the-top flashy packaging designs like other tech companies do. It’s always pretty unique and clean.
Below are several cost-effective packaging methods to reduce costs and ways to understand the different packing expenses in order to get the basics right.
Types of Packaging Costs
There are many different types of packaging expenses that you should consider. For example, there are materials, labor, transportation, and storage expenses.
All these factors can add up quickly, so it’s essential to be mindful of them when making packaging decisions.
Cost of Materials
This includes the cost of the actual packaging materials and any other materials needed for assembly or protecting the product during shipping.
For example, if you’re shipping a fragile item, you’ll need to factor in the cost of bubble wrap or other padding material.
Labor Expenses
Labor costs are also an important consideration. This includes the cost of your employees’ time spent on packaging and any outsourced labor expenses. Include their fees in your calculation if you’re using a fulfillment company.
Shipping Costs
Transportation costs include fuel, surcharges, or other fees associated with your chosen transport method.
Storage Expenses
Finally, don’t forget to account for storage costs. If you’re storing products long-term, you’ll need to factor in the warehouse space price and the cost of keeping your products safe and secure.
What Factors Contribute to Higher Packing Costs?
Here are some factors which can increase packing costs.
- Long processing times: If processing your packaging takes a lot of time, you need to spend more money producing it.
- Poor packaging materials: If the packing materials you use aren’t sturdy enough to make sure your products do not get damaged, it can increase packaging costs.
- Weight: Heavier packages cost more to deliver because they require more transportation resources (i.e., fuel).
- Distance: Longer distances obviously cost more to ship than shorter ones.
- Value: This one is a bit trickier because it’s not always easy to determine the value of something. But in general, pricier items cost more to transport than cheaper ones.
- Shape: If the shape of a package makes it challenging to fill container space, the price will be higher.
- Weather: The weather can significantly impact how much it costs to deliver a package. For example, if a package has to be shipped during a heat wave, the cost will be higher than if it were delivered during a cold snap. That’s because heat waves can cause delays at shipping hubs, adding to the shipping cost.
- Handling: Packages with fragile or hazardous materials require special care for handling, so the prices for such packages are higher than standard packages.
Reducing packaging costs also comes down to choosing the right materials, so, here are five tips to help you get started.
- Consider product weight: Heavier products will require more robust packaging materials, which will be more expensive. Choose rigid packaging materials to support your product, but don’t overdo it, or you’ll spend more than you need to.
- Think about the size of your product: If you’re selling smaller items, you don’t need to use oversized packaging. That’ll just add to your expenses. Choose packaging that’s the right size for your product, and you’ll save money.
- Consider the environmental impact of your packing materials: Some materials are more sustainable than others, and using them can help reduce your carbon footprint. If you’re looking to be eco-friendly, choose a package made from recycled materials.
- Choose durable materials: You don’t want them to fall apart before your product gets to the customer. Choose materials that won’t tear or break easily and protect your product during shipping and handling.
- Compare prices before you buy: Packing materials can vary widely, so it’s important to compare options before making a purchase.
There are many ways to reduce packaging costs without compromising quality or your brand. Use eco friendly shipping materials, reuse packaging whenever possible, simplify your packaging design, and shop around for the best prices on packaging materials. You can also compare quotes from different packaging vendors, negotiate with vendors for better rates, take advantage of bulk discounts, and use online resources to find coupons and promo codes for packaging supplies.
You must also leverage an advanced route optimization software to optimize your logistics. A delivery route planner can help you improve driver productivity, reduce fuel costs, and increase revenue per driver.
Parker Woodward, Director of Strategic Solutions at Route4Me.
Packaging stock image by Ground Picture/Shutterstock