Expecting that you are ordering a small box, you naturally expect a small price, right? Then the quote comes through and the cost per unit ends up being quite close to the larger box that doesn’t seem like a good deal. It’s like getting overcharged. It usually is not. This is where the cash is really being spent in small format packaging and how it’s not always just a size and price thing.
The majority of the costs do not come down as the box does.
Begin with the middle element. “Packaging” is a broad term for a variety of costs when you buy packaging; and there is only one of those costs that is material.
The set up time, tooling costs, artwork, press time and handling costs are essentially constant. The price of the box is approximately the same, no matter how small or big. The only cost that scales with the size of the box is material – and on a small box material is small. You will make the smallest part of the bill smaller by shrinking the box.
Your quote is made up of:
- Fixed costs which do not consider box size.
- Cost of materials, which varies proportionally to size.
- Completion of that of varying difficulty.
The cost was never really about the size if most of it was up to the person with bigger boxes.
The cost of the tooling is the same no matter which method is used.
The cutting die is one such example. A die is a specially made tool for your box shape and regardless of size, it must be made.
The die making process for a small carton will be similar to that used to make a large carton. The same design time and the same manufacturing process, and the same cost. Distributed over your run, this covers each unit equally, regardless of the area of each unit.
The following are reasons why tooling costs remain level:
- Design time is similar at any size.
- The die has to be manufactured in both directions.
- The price is not charged for area, it is charged for a run.
That is why it seems so costly to buy a few boxes of a small size. There are far fewer units to allocate the tooling cost among.
When you press Setup, it does not consider your box size.
Printing has a similar organization. The press is set-up and plates are prepared and color matched and approved before anything can be printed.
That process is going to take about the same amount of time whether there’s a big box on the sheet or a small box. Your product is small, but the press operator is not operating faster. A block of cost that is fixed and ends up on the job as a whole is called setup cost.
Setup costs include:
- Plate preparation.
- Color-matching and approval.
- Press calibration time.
The reason is the work involved is similar and therefore the setup costs of an eyeliner box and shoe box are very similar.
The small boxes require greater accuracy.
This is where it just doesn’t come cheap; it really costs more. The smaller the size, the tighter the tolerance.
The manufacturing tolerance is approximately the same in absolute value, and therefore a relatively large percentage of the total in a small box. Registration must be more accurate, registration must be tighter, more quality control. Smaller tolerances = slower speed and higher reject rate.
Precision introduces costs in the following ways:
- Tighter registration requirements.
- Slower press speeds.
- Higher rejection rates.
You’re paying for accuracy and accuracy really is more difficult at a small scale.
This book is not designed to be read by a child. This book is not for children.
Another such cost that people are often surprised by is the physical handling. All boxes are folded, glued, verified, counted and packed.
The steps take the same amount of time per step, no matter the size. There is no meaningful difference between how quickly a small carton can be folded and examined, and how quickly a medium sized carton can be folded and examined. Fiddly handling of small items, and careful placement of inserts for small products, if anything, occurs more frequently.
The reasons that handling costs remain high are:
- Individual attention required for each unit.
- Small components are more difficult to put together.
- Inspection can be done in the same amount of time per box.
Labor is costed by the amount of work done, not by the number of square inches of finished board.
Material Is a Small Part of the Bill
The tricky bit comes next. The deceptive bit comes next. Specifying materials is not really a significant cost savings option for small boxes, since material is usually a small percentage of the box’s value.
Brands may try to put a lighter board into the box in the hope of achieving a significant discount, but to their surprise the cut-the-weight savings are minimal and the box feels flimsy. The difference between adequate and good board is often a fraction of a cent per unit, on an eyeliner carton or the like.
There are several reasons why material savings are restricted:
- The proportion of the total costs for board is relatively small.
- Downgrading does not save much.
- There is disproportionate quality loss.
It is perhaps one of the few areas in business where it is seldom worth considering the lower-priced alternative.
There are some instances where the money you save is not worth it.
The great news is that there are real savings, but they’re not where people are searching. They do not shrink, they come from volume and simplifying.
The single biggest lever is ordering more, which spreads out the fixed costs over more units. Avoid new tooling by using a die that is already in existence. Reduce finishes and eliminate press passes. By ensuring your artwork remains stable across reorders, there won’t be any repeat set-up fee.
True savings occurs when:
- Increased volume transferring set-up costs.
- Reusing existing tooling.
- Fewer finishing passes.
The real moving force behind price is the volume. Box size is not.
Final Thoughts
The cost of small boxes will be higher per unit as most of packaging costs will not be based on the size.
The cost of the tooling is not affected by the size, as it is built only once. The time taken for press set up, plates and color approval is equal. Handling and inspection is done on an “as is per unit” basis. And small formats require closer tolerances, which requires slower running and greater waste. The one cost which truly scales is material, and frequently this is actually the smallest portion of the total amount.
When a small carton of eyeliner is priced close to a larger carton, the pricing is typically as it should be. To reduce the price of the unit raise the quantity, use existing tooling as far as possible and minimise finishes. Those levers work. Not reducing the size of the box.
