Short answer: your packaging cost per order is the sum of every component used in that order, each converted to a unit cost: the box or bag, the length of tape, the length of wrap, the void fill and the label. Work out a cost for each order type you send (for example "clothing in a bag" and "fragile item in a box"), then multiply by how many of each you send. To plan stock, work out how much of each item you use per day, multiply by your supplier's lead time, add a safety margin, and reorder when stock falls to that level.
Most small businesses know what a pack of boxes costs but not what packaging costs per order, which makes it hard to price products, set delivery charges or decide whether a different material is worth switching to. This guide gives you the formulas, two worked examples, the hidden costs that are easy to miss, and a simple reorder method. All prices in the examples are illustrative assumptions, not Pack Solution's current prices; use the prices on our product pages, including any volume pricing tiers, when you do your own calculation.
Contents
- Step 1: convert pack prices to unit costs
- Step 2: measure how much each order uses
- Step 3: add up the cost per order type
- Worked examples
- Hidden costs: damage, time and storage
- Ways to reduce cost without increasing damage
- Planning stock: reorder points and quantities
- A simple template
- A monthly review routine
- Questions buyers ask
Step 1: convert pack prices to unit costs
Packaging is sold in packs, rolls, boxes and stacks, so the first job is to turn each purchase into a cost per usable unit. Use prices excluding VAT if your business is VAT-registered and reclaims VAT on purchases; otherwise use the price you actually pay. HMRC's guidance on reclaiming VAT explains how VAT-registered businesses claim VAT back. If you are unsure which applies to you, check with your accountant.
| Item | How it is sold | Unit cost formula |
|---|---|---|
| Boxes | Per box or per pack | Price per pack / boxes per pack |
| Mailing bags | Packs of 100, 50 or 25 | Price per pack / bags per pack |
| Tape | Packs of rolls, each a set length | (Price per pack / rolls per pack) / metres per roll = cost per metre |
| Bubble wrap, paper | Rolls of a set length | Price per roll / metres per roll = cost per metre |
| Labels | Rolls, stacks or sheets | Price per pack / labels per pack |
| Loose fill | Bags by volume | Price per bag / number of orders one bag fills (measure this) |
For reference, Pack Solution product listings state these pack contents, which you will need for the formulas: grey mailing bags in packs of 100 for 4 x 6" to 17 x 24", packs of 50 for 20 x 26" to 28 x 34" and packs of 25 for 34 x 42"; tape in packs of 6 rolls, in lengths such as 66m, 132m and 150m depending on the product; small bubble wrap on 100m rolls; thermal labels at 500 per 4 x 6" roll and 1000 per 4 x 6" fanfold stack. Always check the product page for the current details.
Step 2: measure how much each order uses
Unit costs only become useful when you know how much of each item goes into an order. Measure rather than guess:
- Tape: for a box, a strip along the centre seam is the length of the box plus an overlap down each end. Measure one taped box and note the total metres used, top and bottom.
- Wrap: cut and use a piece for a typical item, then measure the length you used.
- Void fill: for paper, measure the length of paper used per box. For loose fill, count how many boxes one bag fills over a week.
- Labels: usually one shipping label per parcel, plus any fragile labels.
Do this for each order type. Most small businesses have two to five order types that cover nearly all orders.
Step 3: add up the cost per order type
Packaging cost per order = box or bag unit cost + (tape metres x tape cost per metre) + (wrap metres x wrap cost per metre) + void fill cost + label cost + any inserts
Then, for a month:
Monthly packaging cost = sum over order types of (cost per order x number of orders of that type)
It is also worth noting time. If one packaging option takes noticeably longer to pack, that time has a cost too, particularly once you employ packing staff.
Worked examples
These examples use illustrative prices and usage figures chosen to show the method. They are not Pack Solution's prices and not a real business.
Example A: a fragile item in a box
Assumptions:
- Box: £0.70 per box.
- Tape: a pack of 6 rolls costs £7.20, each roll is 66m. Cost per roll = £7.20 / 6 = £1.20. Cost per metre = £1.20 / 66 = about £0.0182.
- Tape used: 0.88m per box (a 30cm box, one strip on the top seam and one on the bottom seam, each with 7cm overlap at both ends: 30 + 7 + 7 = 44cm, times 2 = 88cm).
- Bubble wrap: a 100m roll costs £12.00. Cost per metre = £12.00 / 100 = £0.12. Used: 0.6m per order.
- Paper void fill: a 200m roll costs £30.00. Cost per metre = £30.00 / 200 = £0.15. Used: 1m per order.
- Shipping label: £0.015 per label.
| Component | Calculation | Cost per order |
|---|---|---|
| Box | 1 x £0.70 | £0.700 |
| Tape | 0.88m x £0.0182 | £0.016 |
| Bubble wrap | 0.6m x £0.12 | £0.072 |
| Paper void fill | 1m x £0.15 | £0.150 |
| Label | 1 x £0.015 | £0.015 |
| Total | £0.953, about 95p |
The box is about three-quarters of the cost. Tape, which many people worry about, is under 2p. That is typical: the outer container usually dominates, so choosing the right box size and type has the biggest effect on cost.
Example B: clothing in a mailing bag
Assumptions:
- Mailing bag: a pack of 100 costs £5.00, so £0.05 per bag.
- Clear inner bag: a pack of 100 costs £4.00, so £0.04 per bag.
- Shipping label: £0.015.
Total per order = £0.05 + £0.04 + £0.015 = £0.105, about 10.5p. Without the inner bag, it is £0.065, about 6.5p. This shows why bags are so widely used for clothing, and why the inner bag is worth deciding on deliberately: on these assumptions it is a large share of the total.
Putting it together for a month
Suppose, as an illustration, a business sends 12 boxed orders and 30 bagged orders per working day, over 22 working days:
- Boxed: 22 x 12 = 264 orders x £0.953 = about £251.59
- Bagged: 22 x 30 = 660 orders x £0.105 = £69.30
Total packaging for the month is about £320.89. The boxed orders are fewer than a third of the volume but about four-fifths of the cost. That is where to look first for savings.
Compare mailing bag pack prices
Hidden costs: damage, time and storage
The materials cost is the easy part to measure. Three other costs often matter more and are worth adding to your figures, at least roughly.
Damage and returns
A damaged order typically costs you a replacement item, a second outbound postage charge, possibly a return postage charge, and the time spent dealing with the customer. You can express this per order:
Damage cost per order = damage rate x cost of each damaged order
Illustrative example with assumed figures: if one order in 200 arrives damaged (a damage rate of 0.005) and each damaged order costs £15 to put right, the damage cost is 0.005 x £15 = £0.075, or 7.5p per order. That is more than the cost of the bubble wrap in Example A. If better packing halved the damage rate, it would save about 3.75p per order, which can easily justify a few pence more in materials.
Packing time
If you or your staff are paid, packing time is a real cost:
Time cost per order = minutes per order x (hourly cost / 60)
Illustrative example: at an assumed £12 per hour, each minute costs £0.20. If switching from a standard box to a crash lock box saved 30 seconds per order on assembly and taping, that would be worth about 10p per order, which may cover any difference in box price. Time your own packing for a handful of orders with each option before deciding.
Storage space
Large boxes and bulky rolls take up space, and space has a cost, whether that is rent, a cluttered packing area or stock you cannot find. If storage is tight, holding fewer weeks of the bulkiest items and reordering more often may be worth a slightly higher unit price. Flat-packed boxes, compact envelope boxes and long-length tape rolls help keep the footprint down.
Ways to reduce cost without increasing damage
Cutting packaging cost only makes sense if it does not increase breakages, returns or complaints. A breakage costs far more than the packaging you saved. With that in mind:
- Right-size boxes. A box that fits better needs less void fill and may keep the parcel in a lower postage band. Our guide to choosing a box size explains the method.
- Use bags where a box is not needed. Soft, unbreakable items rarely need a box.
- Match board strength to the item. Single wall boxes cost less than double wall; use double wall only where it is needed.
- Use longer tape rolls on busy benches. Fewer roll changes save time. Our clear and brown tapes include 132m and 150m options alongside 66m rolls.
- Choose faster formats where volume is high. Crash lock boxes need tape only on top, which saves time and tape.
- Use volume pricing. Many of our product pages show prices that fall as quantity rises. Compare the per-unit cost at the quantity you actually use, not the headline price.
- Review inserts. Printed cards, tissue and stickers add cost. Keep the ones that bring repeat orders or reviews.
Avoid false savings: thinner wrap that causes breakages, boxes that are too small, or tape that does not hold.
Planning stock: reorder points and quantities
Running out of a key box size or label roll stops dispatch. Overstocking ties up cash and storage space. A reorder point balances the two.
The reorder point
Reorder point = (average daily usage x lead time in days) + safety stock
- Average daily usage: how many you use on a typical working day. Take the last few weeks and divide by working days.
- Lead time: how many working days from placing an order to having the stock ready to use. Include your own ordering habits, not just delivery.
- Safety stock: extra to cover busy days or delays. A common simple approach is a number of days' usage, for example one to three days, chosen by how variable your sales are.
Illustrative example: you use 12 boxes of one size per day, lead time is 2 working days (an assumption for this example), and you keep 1.5 days of safety stock.
Reorder point = (12 x 2) + (12 x 1.5) = 24 + 18 = 42 boxes. When stock falls to 42, reorder.
The reorder quantity
A simple approach is to order enough to last a fixed period:
Reorder quantity = average daily usage x days of cover you want
For 15 working days of cover: 12 x 15 = 180 boxes. Adjust for pack sizes, volume price breaks, storage space and cash flow. Boxes are supplied flat, but 180 boxes of a larger size still take up real space.
How long consumables last
For items used by length, convert usage to days of supply. Using the illustrative figures from Example A:
- Tape: 12 boxes x 0.88m = 10.56m per day. A 66m roll lasts 66 / 10.56 = about 6.25 days, so a pack of 6 rolls lasts about 37.5 working days.
- Bubble wrap: if 5 orders a day use 0.6m each, that is 3m per day, so a 100m roll lasts about 33 working days.
- Labels: at 40 parcels a day, a 500-label roll lasts 12.5 working days and a 1000-label stack 25 working days.
Set reorder points for these in rolls or packs, using the same formula.
Seasonality
If your sales rise at particular times of year, base the reorder point on expected usage for that period, not the yearly average. Review your reorder points before busy periods.
A simple template
A spreadsheet with these columns is enough for most small businesses:
| Column | What to enter |
|---|---|
| Item | Product name and size, for example single wall 12 x 9 x 6" |
| Pack price (ex VAT) | From the product page at your usual order quantity |
| Units per pack | Boxes, bags, metres or labels |
| Unit cost | Pack price / units per pack |
| Usage per order | Measured |
| Cost per order | Unit cost x usage per order |
| Average daily usage | From the last few weeks |
| Lead time (days) | Including your ordering routine |
| Safety stock | Days of usage you want as a buffer |
| Reorder point | Daily usage x lead time + safety stock |
| Reorder quantity | Daily usage x days of cover |
| Current stock | Updated weekly |
Update prices when you reorder and usage figures every month or two. The numbers only stay useful if they reflect what you actually do.
A monthly review routine
The calculations are only useful if someone looks at them regularly. A short monthly routine, around half an hour for most small businesses, keeps costs and stock under control:
- Count stock of each packaging item and compare it with the reorder point.
- Check usage against the previous month. A sudden rise in one box size may mean a product has changed or packers are using the wrong size.
- Review damage reports. If complaints cluster around one product or packaging type, fix the packing before looking for cheaper materials.
- Update prices from your latest order, including any volume tier you reached.
- Recalculate cost per order type and note any change.
- Adjust reorder points for the coming month, especially before a busy season.
Keeping these notes month by month also gives you a record of what changed and when, which makes it much easier to judge whether a new material or box style actually saved money.
Delivery and lead time
Lead time is part of the reorder calculation, so use your supplier's real dispatch and delivery terms. Pack Solution's shipping policy sets out our dispatch cut-off and delivery options, including free click and collect from our Manchester unit. Note that the policy lists some larger box sizes as 2-day delivery only, which affects lead time for those items.
Questions buyers ask
What is a typical packaging cost per order?
It varies too much by product and packaging to give a meaningful average. A soft item in a mailing bag may cost a few pence; a fragile item in a double wall box with wrap and fill may cost much more. Work out your own figures using the method above.
Should I include VAT?
Use prices excluding VAT if your business reclaims VAT on purchases, and including VAT if it does not. Check HMRC guidance or your accountant if unsure.
How often should I recalculate?
Whenever prices or packaging change, and otherwise every few months. Usage figures drift as your product mix changes.
Is buying in bulk always cheaper?
Per unit, often yes, where volume tiers apply. But bulk stock uses cash and space, and may go unused if your products change. Buy in bulk for items you use steadily, and smaller quantities for sizes you rarely use.
How much safety stock should I keep?
Enough to cover normal swings in demand and occasional delays. One to three days' usage is a common simple starting point for consumables with short lead times; increase it if your sales are unpredictable.
Does the cheapest packaging save the most money?
Not if it causes breakages or returns. Include the cost of damage when comparing options.
Summary
Convert every packaging purchase to a unit cost, measure how much each order type uses, and add it up to get a cost per order. Add rough figures for damage, packing time and storage, because they often outweigh small differences in material prices. Multiply by order volumes to see where the money goes, which is usually the outer box. Then use daily usage, lead time and a safety margin to set reorder points, and order enough to cover a sensible number of days. Review the numbers regularly, and never save on packaging at the expense of damage.
