How to look at product label costs: Brand story first, price secondPosted on November 30th, 2020
Labels aren’t purely a cost. They’re also an investment in your brand, and deeply affect how consumers perceive your products.
To many consumers, your label is an extension of your brand and, in fact, the label branding — not the product — is often what entices them to put your product in their cart.
Recent neuromarketing studies corroborate this, revealing that minor label material and design changes have a major impact on how consumers perceive products at point-of-purchase.
So when you factor in brand equity, consumer perception and sales uplift, minor cost discrepancies often become inconsequential.
Here, we’ll explain why brands shouldn’t take a “price-first” approach to designing labels or partnering with a label converter. And, for the price-conscious brands out there, we’ll reveal a few ways your procurement team can cut costs without compromising your branding.
Before cutting costs, ask this question:
What do I want people to feel when they see my product’s label?
Sometimes, you can tell the right packaging story with a relatively cost-effective label. Consider salsa labels — most brands are able to differentiate their brand with colorful graphics printed on relatively simple, unembellished paper or film labels.
Other times, you may have to invest in more expensive label finishes and decorations to ensure your packaging story strikes the right note for your product category and target audience. Top-shelf liquors, for example, require top-shelf labels to justify their price point.
Many of the brands we work with understand that their labels are inextricably linked to their brand, and have developed one-of-a-kind label concepts for us to bring to life:
- Leveraging embossing and debossing to create a tactile, 3D effect.
- Creating depth by mixing and matching spot varnishes.
- Switching to a metalized label material, enhancing differentiation between brands in a product family.
- Building trust by allowing consumers to authenticate high-end products in real time by scanning your NFC tag.
- Switching to a sustainable label material that supported the recycling of PET containers.
- Employing a variety of luxury finishes to command top-shelf prices.
The pricing for all of these label concepts are vastly different but, for many brands, price reduction takes a backseat to product differentiation and communicating the right packaging story. And rightfully so.
Basically, you shouldn’t pursue cost reductions in a vacuum.
Doing so could have unintended consequences for your brand:
- You could engineer the cheapest label possible, but if it doesn’t tell the right story for your segment, it won’t attract customers and your product will gather dust on the shelf.
- You could partner with the cheapest label supplier, but at what cost? Poor communication, dated production technology, missed orders and inconsistent print quality are very real risks. (Speaking of label supplier selection, here’s our advice on how to get the most out of the bid process).
- You could switch to a cheaper label material, but it might result in a loss of brand equity. Finance follows form in many branding decisions.
Still, all brands want to lock in competitive pricing for their labels, no matter how elaborate their concept.
And if your procurement team is looking to cut year-over-year costs, keep reading. We’ll explore several ways your label converter can shave a few percentage points off without making any changes to your brand owner’s label concept.
4 ways to cut costs without negatively impacting branding
Custom label converting is a complex manufacturing process. Your converter sources raw materials, and performs a series of processes (printing, die cutting, embellishing) that transforms them into the rolls of finished labels that arrive at your facility.
Because we tailor our process slightly to achieve each brand’s individual vision, pricing will look a bit different for every brand.
We work with brands on an individual basis to strike a balance between what your procurement team needs in terms of cost efficiencies, and what your brand owner needs in terms of product differentiation.
Below, we’ll narrow in on four factors affecting label pricing — and how you can use each to shave a few percentage points off your labeling costs. For one-on-one pricing information, feel free to reach out to our team directly.
1. Order size
The larger your order, the lower your per-label cost will be. This is because the press setup time and make-ready waste get spread out over more labels.
Order labels less often, and in larger quantities. For example, instead of ordering labels every month, you could order quarterly and pay significantly less per label.
To learn how your label converter can help you balance risk and cost when choreographing orders, check out this article.
2. Print technology
Plate-free digital offers the best per-label value at low volumes because it eliminates upfront tooling costs. At higher volumes, flexo’s unparalleled throughput speed neutralizes the cost of plates. And Digital Impact, a hybrid technology, is used in some cases to reap the benefits of both flexo and digital.
None of these technologies are inherently “better” than the others. In fact, many brands benefit from employing a mixture of technologies across their product portfolio. To see why, check out this article which walks through scenarios in which each technology provides the best pricing.
Flexo invariably provides the best value for long runs with little variability. But for products that have many flavors, scents or seasonal variations, ask your label converter about digital printing or Digital Impact.
The variable data capabilities of these technologies will allow you to combine many SKUs into one order, thereby reducing your overall per-label costs. It’s important to note that you can only combine labels that are the same size and use the same material.
3. Finishes and embellishments
While a good deal of brands keep it simple — compelling graphics printed on a paper, film or foil substrates — many also elect to take their label to the next level with premium finishes like spot varnishes, pattern embossing and foil stamping. Luxury finishes help top-shelf products look the part, and command top-shelf prices.
Some embellishments are more cost-effective than others. When considering your options, ask your label converter if there are multiple options that achieve similar effects.
You could, for example, incorporate several spot varnishes, each incurring its own custom tooling cost. But if you like one of our existing pattern varnish dies, then you’ll get a textured look without investing in any custom dies.
4. Label size
It’s easy to see how the size of your label affects cost: Bigger labels use more material. What you may not have considered, though, is that label presses have a set web width — and you can cut costs by optimizing the size of your label to maximize the number of labels that can be printed at once.
Ask your label converter to optimize the size of your label to the press width. Simply updating the label size helped one winery we work with save 20% on their label costs.
Get one-on-one pricing information
If you reach out to us, we’ll do much more than give you a competitive number. We’ll take a holistic look at your label spend to identify opportunities to add value, while reducing risk and cutting cost. Chat with our team today for individualized pricing information.