As a producer of packaged goods, you’re definitely familiar with calculating the cost of everything that goes into manufacturing and selling your product. There are often dozens of tiny costs that add up, from labor and materials of manufacturing the product itself to packaging, labeling, and marketing. Out of these, let’s talk about the cost of custom labels—after all, this is what we know best.
First off, the cost of labels can vary a lot. Think tenfold or even hundredfold if you go from a basic black and white sticker on plain paper to a complex 3D label with an NFC tag. Let’s see what goes into label pricing.
What Impacts the Price of Labels?
Not surprisingly, there are a lot of factors that affect the price of a label—the variation, the batch, and the individual label costs. Some factors to think about include:
- Size: A small label requires less material than a huge label.
- Quantity: Printing a small batch will be more expensive per label than printing higher volumes.
- Digital vs. Flexo: The printing technology used for your labels, which is often driven by the label design and goals, impacts costs.
- Varnishes: The types of varnishes used also matter a lot: spot varnish or glossy ink will add up to the price.
- Special Materials: Using gold finishes, varnishes, and other non-standard materials can add costs.
- Durability: Do you need your label to last for a long time or withstand harsh environments (like a cooler on game day)? Materials and coatings are available to keep your label looking good, but they cost more than less durable counterparts.
And, of course, there’s the elephant in the room, too. We’ve written before about how prices for label materials and other packaging items are expected to continue to grow because of the global supply chain issues. Growing inflation will add to that as well.
Most analysts actually expect that the label and packaging prices will grow more than inflation. But all of this doesn’t mean that there aren’t ways to keep costs in line with your budget.
How to Think About Custom Label Costs
Manufacturers are spending more on labels. But it’s not just because labels have gotten more expensive. It’s also because more than 60% of consumers choose products based on their labeling and packaging. If you are in a crowded industry, a good custom label can make a huge difference in your sales.
Of course, this doesn’t mean that you should spend 2X your product costs on your labels. It means that you should treat them as a marketing opportunity and adjust your budget accordingly. Some things to keep in mind when doing that:
1. Align Your Label Budget with the Rest of Your Production Costs. If you’re selling a premium product, you need a premium label. Otherwise, the potential buyers who see your product on the shelf are going to think that there’s nothing to justify the high price.
Similarly, if your product is budget-friendly, it makes no sense to invest in a premium label. It will clash with the price and you’ll be hard-pressed to find the ROI of the labels.
To make sure your label costs align with your product costs, you can set your label budget as a percentage range of production costs or selling price. Then you can work with your custom label printer to craft a label in that range.
2. Consider the Price Per Label, but Also Total Costs. If you want a lower cost per label, large batches are the way to go—but only if it makes sense to print (and pay for) that many labels. Printing large batches of labels means a significant reduction in the price per label, but a higher batch cost. If you aren’t certain you’ll need the full batch quantity, your price per label used could actually be higher.
Quantity breaks are a big challenge for brands. At Labeltronix, we use Lean Labeling to give our customers the flexibility and cost effectiveness they need. Learn more about Lean Labeling and if it’s right for you here.
When large batches don’t make sense—for example if you’re testing varieties, personalizing products, or doing very small batches—another option we’ve recently introduced is Dynamic Hybrid Labeling. Combine the quality of premium labels with the convenience and flexibility of on-demand label printing. You can print labels in real-time, when you need them, and make changes very fast without wasting already-printed labels.
3. Plan Ahead. Knowing which type of labels you need and the batch size for each of them will help you keep costs under control, even if you only have approximate numbers to begin with. Whenever possible, think six months or even a year ahead.
Remember what we said above about the global supply chain issues? They don’t just affect the prices; they also affect the availability of certain varnishes, papers, or other materials. So if you use any special materials, planning ahead will help manage costs and ensure that those materials are available when you need them.
Want more advice on how to get the labels your product needs to stand out from the crowd? Talk to our custom labeling experts.