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% of cost for packaging

Postby zippyflounder » March 1st, 2011, 1:07 pm


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In a product with a high perceived value what % of the wholesale cost do you think the creation of the packaging should be?

Re: % of cost for packaging

Postby rkuchinsky » March 1st, 2011, 1:10 pm

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not sure the question. Do you mean the design of the packaging or the % of the cost in relation to the total cost of product + pkg? Also don't understand what you mean wholesale? Normally the packaging is included in the wholesale price. Do you mean % of total FOB costs?

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Re: % of cost for packaging

Postby Boosted561 » March 1st, 2011, 1:18 pm

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That really depends on the industry and commodity (material) of the packaging. For food and beverage it can be upwards of 50% or more on COGS. I'm sure for electronics and other industries it can be a much smaller percentage.

Re: % of cost for packaging

Postby zippyflounder » March 1st, 2011, 1:23 pm


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rkuchinsky wrote:not sure the question. Do you mean the design of the packaging or the % of the cost in relation to the total cost of product + pkg? Also don't understand what you mean wholesale? Normally the packaging is included in the wholesale price. Do you mean % of total FOB costs?

R

total cost to retailer

Re: % of cost for packaging

Postby rkuchinsky » March 1st, 2011, 1:25 pm

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again, still not clear. If you are selling wholesale, the packaging is part of the wholesale price of the product. There is no breakdown, so they don't have a cost of the packaging as a %.

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Re: % of cost for packaging

Postby Mr-914 » March 1st, 2011, 1:28 pm

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Zippy: Wow, that is really unclear question. It all depends on the product. Perfume packaging costs 10 x the cost of the product. Food packaging takes up a big percent of the total cost. However, an electronic device is probably 5% cost for packaging. Can you clarify?
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Re: % of cost for packaging

Postby zippyflounder » March 1st, 2011, 1:32 pm


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rkuchinsky wrote:again, still not clear. If you are selling wholesale, the packaging is part of the wholesale price of the product. There is no breakdown, so they don't have a cost of the packaging as a %.

R


doing a spread sheet, trying to figure out how much $ to put into the package design and construction. This is a consumer level consumable (not durable) with high perceived value (we hope) so as a % of projected retail price how much should be the bloody package?

Re: % of cost for packaging

Postby zippyflounder » March 1st, 2011, 1:35 pm


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Mr-914 wrote:Zippy: Wow, that is really unclear question. It all depends on the product. Perfume packaging costs 10 x the cost of the product. Food packaging takes up a big percent of the total cost. However, an electronic device is probably 5% cost for packaging. Can you clarify?

Food product, new type (my coffee thing).

Re: % of cost for packaging

Postby PackageID » March 1st, 2011, 1:42 pm

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It all depends on price point and category. Can you give that info? This is what normal determines packaging cost.

Example a $0.99 value food item my only have less than %10 of their cost for packaging where as a $50 bottle of wine may have upwards of %30 to %40 of packaging cost.
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Re: % of cost for packaging

Postby rkuchinsky » March 1st, 2011, 1:44 pm

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zippyflounder wrote:
rkuchinsky wrote:again, still not clear. If you are selling wholesale, the packaging is part of the wholesale price of the product. There is no breakdown, so they don't have a cost of the packaging as a %.

R


doing a spread sheet, trying to figure out how much $ to put into the package design and construction. This is a consumer level consumable (not durable) with high perceived value (we hope) so as a % of projected retail price how much should be the bloody package?



I'd look at it another way.

Figure out what your product cost is. Probably similar to competitors or a bit higher if premium. Figure out how much above the competitors you can sell at and go from there. % is pretty irrelevant, esp. when you take things like volumes (ie. you making low volume vs. costs at high volumes) into account.

For example -

If average competitor sells for $20

Your product you feel is 20% better, so you can sell for $20 + 20% = $24. Back out of that your margin and cost of goods and you have what is left for packaging.

Unless you can bring something totally different via packaging, in which case you can demand more, say it's $20, but comes in a reusable tin.

It's more a function of your margins and costs than %s. Generally the higher premium level the product, the higher % in costs the packaging is.....


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Re: % of cost for packaging

Postby zippyflounder » March 1st, 2011, 1:56 pm


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PackageID wrote:It all depends on price point and category. Can you give that info? This is what normal determines packaging cost.

Example a $0.99 value food item my only have less than %10 of their cost for packaging where as a $50 bottle of wine may have upwards of %30 to %40 of packaging cost.
No the wine bottle example is flawed, the variable cost is only in the label after all both 2 buck chuck and a 50 buck bottle of Merlot have the same bottle etc. Think in terms of say canned salmon or better domestic caviar, the former just has a label the latter a beauty box.

% of cost for packaging

Postby PackageID » March 1st, 2011, 2:03 pm

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zippyflounder wrote:
PackageID wrote:It all depends on price point and category. Can you give that info? This is what normal determines packaging cost.

Example a $0.99 value food item my only have less than %10 of their cost for packaging where as a $50 bottle of wine may have upwards of %30 to %40 of packaging cost.
No the wine bottle example is flawed, the variable cost is only in the label after all both 2 buck chuck and a 50 buck bottle of Merlot have the same bottle etc. Think in terms of say canned salmon or better domestic caviar, the former just has a label the latter a beauty box.

Canned salmon or caviar could also come in a stock tin or jar with a label. How about fine spirits with a custom bottle. Is that a better example? What I am getting at is the higher you price point and perceived value you have more money to spend on pkg.

It is all about price. How much does your raw product cost, what are conversion costs, how much do you plan to sell it for, and what are you profit margins. All of this should be able to tell you how much you have to spend on pkg.
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Re: % of cost for packaging

Postby zippyflounder » March 1st, 2011, 2:07 pm


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PackageID wrote:
zippyflounder wrote:
PackageID wrote:It all depends on price point and category. Can you give that info? This is what normal determines packaging cost.

Example a $0.99 value food item my only have less than %10 of their cost for packaging where as a $50 bottle of wine may have upwards of %30 to %40 of packaging cost.
No the wine bottle example is flawed, the variable cost is only in the label after all both 2 buck chuck and a 50 buck bottle of Merlot have the same bottle etc. Think in terms of say canned salmon or better domestic caviar, the former just has a label the latter a beauty box.

Canned salmon or caviar could also come in a stock tin or jar with a label. How about fine spirits with a custom bottle. Is that a better example? What I am getting at is the higher you price point and perceived value you have more money to spend on pkg.
Oh I understand, the question is HOW much more? This is not a grocery store shelf item yet, comes by ups etc and lives in your pantry until use.

Re: % of cost for packaging

Postby zippyflounder » March 1st, 2011, 2:10 pm


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PackageID wrote:
zippyflounder wrote:
PackageID wrote:It all depends on price point and category. Can you give that info? This is what normal determines packaging cost.

Example a $0.99 value food item my only have less than %10 of their cost for packaging where as a $50 bottle of wine may have upwards of %30 to %40 of packaging cost.
No the wine bottle example is flawed, the variable cost is only in the label after all both 2 buck chuck and a 50 buck bottle of Merlot have the same bottle etc. Think in terms of say canned salmon or better domestic caviar, the former just has a label the latter a beauty box.

Canned salmon or caviar could also come in a stock tin or jar with a label. How about fine spirits with a custom bottle. Is that a better example? What I am getting at is the higher you price point and perceived value you have more money to spend on pkg.

It is all about price. How much does your raw product cost, what are conversion costs, how much do you plan to sell it for, and what are you profit margins. All of this should be able to tell you how much you have to spend on pkg.

or you book that extra money in your bottom line..ie profit.

Re: % of cost for packaging

Postby rkuchinsky » March 1st, 2011, 2:15 pm

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If it really is premium, it's more than just numbers. it's how much value does the packaging add. Does it make the consumer think more highly of the brand/product, tell other people, purchase again, purchase even though the price is higher?

Premium brands require more than bottom line thinking.

If you look at Apple, they obviously spend a lot on packaging. Could you put a iphone in brown cardboard box with a 2 color stick and off the shelf packing peanuts? Sure. Would the same number of people buy it? Probably. But the custom packaging adds a lot of emotional value that increase minshare as well as marketshare, so it's worth it.

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