Do you know the total cost of ownership for your packaging?

Historically, packaging has been a simple way to get products to an end customer. Relatively little thought went into the cost of the packaging, where it came from, or where it would eventually end up. Even less effort went into the dunnage used to protect the products.  

Fast-forward to 2025 and companies are seeing the real costs of their packaging. They're recognizing the need for aesthetics and performance in packaging, with a newfound emphasis on sustainability that has changed the packaging market. With global ecommerce sales continuing to increase year after year, the race is on to control packaging expenses as a way to reduce overall supply chain costs. To determine the holistic picture of their packaging costs, organizations are prioritizing the TCO of their packaging.

Our ebook, The Real Cost of Packaging, explores this subject in greater depth. 

How do you calculate TCO in packaging?

In packaging, TCO is a cost estimate designed to help buyers and owners determine the direct and indirect costs of packaging. The following variables contribute to the TCO of packaging:

• Product costs
• Process efficiency
• Risk potential
• Workplace and warehousing costs
• Transportation and freight costs
• Regulatory costs

No two packaging processes are identical, and organizations need to define the costs inherent to their processes and their products. A TCO calculation may look like this:

To get an accurate picture of the TCO for your organization, you may need to do a far-reaching audit of all departments to determine the initial costs, operational costs, risks, warehousing, freight, and regulatory costs. This may involve your operations, procurement, supply chain specialists, your organization’s legal team, financial personnel and many other professionals inside and outside of your organization. 

Working with a packaging solutions provider may be the simplest way to determine your organization’s TCO, while simplifying your entire supply chain and identifying hidden opportunities for savings. 

5 packaging challenges to avoid

The introduction of UPS and FedEx dimensional freight charges changed the calculus of packaging costs, among other shifting variables. The costs of packaging go beyond the price of the box, container or envelope itself and include:

Inefficient use of warehouse space

Every inch of space in the distribution facility is valuable. If you have wasted space within the cartons in your distribution center, it can send a ripple effect through your operation. The main cause of wasted space in distribution centers is cartons not being optimized. Maximize warehouse space utilization by investing in right-sized packaging for your product as well as for transport, and position those materials in a way that helps streamline the placement and picking of goods.

Damage to products

Ecommerce damage not only costs companies an estimated $6 billion a year, but it also requires return shipments, re-issue, and reimbursement costs. High damage rates are not sustainable, it is typically many times more expensive to replace the product than it was to originally ship it. Additionally, product damage can also hurt a brand’s reputation, leading to lost sales and customers who don't return. 

Failure to reuse and recycle

Today’s consumers are increasingly conscious about what happens to their boxes once they are done with them. To align with your customers’ sustainable values, seek out packaging that is optimized for reuse and recycling. 

Wasteful labor costs

Improving your packaging gets products to the customer faster and more efficiently by reducing labor, repackaging, and returns due to damage. It allows companies to get their products on the shelves and into the hands of their customers faster. Delays and inefficiencies resulting from low-quality packaging can have significant impacts on the bottom line. 

Damage to your brand

Packaging can play an important role in customers' purchase decisions. Customers want high-quality, attractive packaging that enhances the user experience, as opposed to low-quality packaging that cheapens the product overall. The latter can deter buyers from coming back for more or recommending your brand to their friends and family.

How much can you save?

Packaging engineers play a critical role throughout the supply chain and are instrumental in helping organizations discover significant savings opportunities. Trillora optimizes packaging for customers, resulting in a $300,000 reduction in airfreight costs in one example. In another case, Trillora reduced a global footwear producer’s transport spend by $1.2 million by standardizing material usage and reducing box complexity.

Work with packaging experts to determine the Total Cost of Ownership

According to Pitney Bowes, 161 billion parcels were delivered globally in 2022, up from 159 billion in 2021. These packages also represent a significant monetary investment in the packaging and dunnage itself, a large labor investment for the workers who touch each of those boxes, and a time investment for the companies using them.   

Read our ebook, The Real Cost of Packaging, to examine the TCO of your packaging program more deeply.

Recognizing that packaging is not their core business focus, more companies are working with packaging solutions providers that offer a turnkey service to design and produce packaging for companies. With global design and engineering centers and dozens of qualified packaging suppliers, Trillora has become the single point of contact for some of the world’s largest brands, managing their packaging process from structure design to supplier coordination to packaging production.