Customers and prospects often tell us, “We need a lower price!” In some cases, the most truthful response we can offer is, “You can’t afford a lower price.”
Driving down the price on packaging items is frequently a priority for small and large organizations alike, but it can backfire — sometimes in ways that are readily apparent and other times, not so apparent. Here are some important insights that will help you reduce packaging prices in a way that improves rather than detracts from your operational efficiency and results.
The Two Ways of Driving Down Prices
To push down the unit price of a given packaging item, you really only have two basic options:
- Switch to a less expensive product.
- Negotiate a lower price for the product you’re using.
1. The Problems with Less Expensive Products
The danger here is fairly obvious: a less expensive packaging product may not adequately protect what you are shipping. Saving a little money on, say, box sealing tape or corrugated containers, is hardly worth an uptick in product damage, unhappy customers, returns, and rejections — to say nothing of the negative effect on your reputation as a result of all these issues.
2. The Problem with Negotiating a Lower Price
Pushing suppliers too hard for lower prices can cause all sorts of problems for your suppliers — and for you. Over the years, we have seen big retailers and manufacturers push smaller suppliers so 
hard they push those suppliers right out of business. Then, the big retailer finds its shelves empty of popular products, and the big manufacturer can’t get critical components and as a result has to shut down production.
On a smaller scale but along the same lines, if you make it difficult or impossible for your packaging supplier to make a reasonable profit, don’t be surprised if you receive a lower level of service. Especially if you have unpredictable packaging needs, occasional emergencies, an ongoing need for packaging design solutions, or any other type of value-added requirement, you want to make sure you are a high-priority customer.
How to Reduce Packaging Prices the Right Way
We are always interested in helping customers reduce prices in a sensible and strategic way. Among the most effective approaches are one or more of the following:
- Increasing order quantity. Bigger shipments reduce per-item shipping cost, sometimes significantly. With regard to custom product packaging, such as corrugated boxes, larger production runs reduce per-item cost, often significantly.
- Combine items. Ordering and shipping several items together has the same effect on shipping costs as noted above.
- Switch to a lower-priced product after testing. We are all for helping you find lower-price options — but let’s make sure those options work before making a change.
A final tip about testing: take the time and devote the resources to give a potential new product a fair and thorough test. For instance, testing a few hand-made corrugated box samples is better than nothing, but until you have a production run of those boxes, you won’t be able to assess product consistency, lead time reliability, and other critical factors.
Price-per-Item Versus Cost-in-Use
The focus on this post is on item pricing. While this is important, keep in mind the purchase price of your packaging is only one factor in the total cost of your packaging — and most of the time, it is a minor factor.
The real question you should always be thinking about is, “What is the total cost of using this packaging product?”
This is a complicated question, but we can help you answer it. Factors that go into cost-in-use include the effect on your packaging line speed, quality of product protection, storage and handling costs, safety, ergonomics, and eco-friendly packaging considerations.
You can contact us through this site or call us at 630-551-1700 for assistance in getting the best possible value from your packaging products and procurement. Anyone of our branded packaging consultants is ready to discuss it with you.
Related posts:
https://www.salazarpackaging.com/what-you-dont-know-about-e-commerce-packaging-costs/
https://www.salazarpackaging.com/expert-advice-to-help-reduce-your-dtc-packaging-costs/
