Lending Club Blog

How Packaging Influences Price

We all know that buying in bulk usually yields the lowest unit cost. But there’s a lot more to packaging than just the quantity of product within the box. Here are just a few examples.

Convenience Features

Features added to packaging for the convenience of the user are quite common and often lead to higher prices. Consider the zip tops on bags for shredded cheese. That feature makes it easier to access the product and may help to keep it fresh longer. That may be valuable to you depending on your needs. If you’re using an entire bag of shredded cheese in a recipe, easy access and resealing are probably not as important as the quality of the product itself. Paying more for a product with such features would be a mistake in such a situation. If you sprinkle a little cheese on your salad each day, then the convenience may be well worth any added packaging cost.

Special Labeling

As a migraine sufferer I was excited when Excedrin pain reliever came out with the new Excedrin Migraine product. Listening carefully to the commercial I learned that the product was exactly the same as Extra Strength Excedrin, but the label had additional information about migraines. I suppose that some users got more relief from the placebo effect of not knowing they were taking the same medicine, but paying more for the same product wasn’t going to help me at all.

Pre-Portioned Servings

Rather than label their product “High Unit Cost” the marketers at many snack companies ingeniously came up with “100 Calorie Packs” and similar names instead. By appealing to dieters who still want an occasional treat, these companies are able to sell their products at a much higher price than larger quantity packages. Again, some people may find this package size useful and worth the added cost, but anyone eating multiple packs would be better served financially to buy in larger quantities. Another example of portioned packaging is how small packages of M&Ms are labeled “Fun Size.” I always laugh when I see that since I know that eating an extra large bag of M&Ms would be a lot more fun!

It shouldn’t come as a surprise that manufacturers offer products in many different packages. Different people will benefit from each of the types of packaging. It’s important to realize that when you make a purchase, you are paying for more than just the product inside. Depending on the type of package you choose, you may also be paying for a convenience feature, special label, pre-portioned serving or one of many other packaging costs. Understanding the premiums paid for the different types of packaging will help you to decide if it’s worth the price.

What other ways have you seen packaging influence price?

Thursday, February 26th, 2009 at 5:42 am

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    February 27th, 2009 at 1:13 am

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