Commercial Production Guide
Cost per Package
Cost per package is the number every retail price must clear: the share of batch product in the package, plus the bag, the absorber, the label, the packaging labor and a share of loss. Add an overhead allocation only if your pricing includes overhead at the package level.
Category: Costing
Formula
Cost per Package = Product Share + Bag + Absorber + Label + Packaging Labor + Loss Share (+ Allocated Overhead)
Each term is a per-package value: the product in the package at its cost per gram, the consumables in the package, the labor it took to fill and seal it, and a fair share of any packaging loss.
Enter your own values. The Cost per Package calculator builds this from batch totals or cost per gram with packaging and labor add-ons.
The Per-Package Lines
A finished package is a small bundle of costs:
- Product share. The net food weight in the package times your cost per finished gram, from the cost per finished weight guide.
- Bag or container. The pouch, jar or other container at its unit purchase price.
- Absorber. The oxygen absorber or desiccant at its unit price, when used.
- Label. Label stock and printing per package, including setup spread over the run.
- Labor. The packaging minutes per package at your hourly labor cost.
- Loss share. A share of packaging loss (rejected seals, breakage, overfill) divided across the packages that pass.
Optional Overhead Allocation
Overhead allocation at the package level is a choice, not a rule: some operations price from direct costs and cover overhead from markup; others add an explicit per-package overhead line. Both work if they are consistent and documented. What does not work is ignoring overhead entirely and mistaking direct cost for total cost.
Why Package Size Changes the Picture
The bag, absorber and label cost roughly the same whether the package holds a little or a lot, so small packages concentrate packaging cost and large packages spread it. That is why the same product can justify very different pricing by package size, and why package size decisions belong in costing, not just marketing.
Tools that pair with this guide
- Cost per Package calculator: true cost per finished package from batch totals or unit costs.
- Package Quantity calculator: how many packages a batch yields at your target net weight.
- Net Package Weight calculator: the food weight after bag, absorber and label are subtracted.
- Pricing Calculator: from cost per package to a selling price with margin or markup.
Frequently Asked Questions
Should packaging loss be in the cost per package?
Yes, if pricing is meant to cover the whole run: the packages that fail still cost money, and that cost must be carried by the packages that sell. The [[production losses guide|/commercial/production-losses/]] covers the categories.
How do I cost the label?
Take the label purchase price, add any print setup, and divide by the number of labels in the order for a per-label value. Small runs make labels surprisingly expensive per package.
Is overhead per package required?
No. It is optional but should be deliberate: either allocate it consistently per package or cover it through markup. Ignoring it is the option that loses money.
Key Takeaways
- Cost per package = product share + bag + absorber + label + packaging labor + loss share, plus overhead only if you allocate it.
- Packaging cost concentrates in small packages, so package size is a costing decision.
- The Cost per Package calculator computes it from your own totals and add-ons.
Related Guides
Continue through the Commercial Production Center with these related guides.