By 2025, industrial packaging will no longer be about the lowest price, but about the total cost over the entire lifecycle. This article by Faes explains how to calculate the Total Cost of Ownership (TCO) and why sustainable, reusable solutions are often the most cost-effective choice.
Summary of this article
Calculating the total cost of industrial packaging involves more than just the purchase price. You need to take into account material costs, production costs and transport costs, as well as less obvious factors such as maintenance, reuse and sustainability. By adopting a Total Cost of Ownership (TCO) approach, you gain insight into the actual costs across the entire lifecycle of your packaging solution. This article helps you to identify all cost components and make a realistic calculation for 2025.
The total costs of industrial packaging consist of direct and indirect components that together determine the actual investment. The direct costs are the most visible: material costs (wood, metal, plastic, foam), production costs (labour, machinery), and transport costs for the delivery of the packaging.
In addition to these visible costs, there are also less obvious cost components:
Many companies underestimate these hidden costs, even though they can have a significant impact on the overall picture. For example: cheaper packaging that wears out more quickly or offers less protection can, in the long run, lead to higher costs due to product damage or the need for replacement.
For sectors such as defence, medical or high-tech, there are additional specific costs for certifications, clean room packaging or special protection requirements. These costs are directly linked to the regulations and standards applicable in these sectors, such as MIL-STD or UN certifications.
Total Cost of Ownership (TCO) gives you insight into the actual costs of a packaging solution throughout its entire lifecycle. This approach helps you look beyond just the initial purchase price and enables a fairer comparison between different options. To calculate the TCO of industrial packaging, follow these steps:
Calculate end-of-life costs: Costs for recycling, disposal or residual value
A simple formula for TCO calculation is:
TCO = Purchase costs + (Usage costs × Number of usage cycles) + Maintenance costs + End-of-life costs
Let’s illustrate this with an example:
| Cost component | Standard packaging | Premium packaging |
| Purchase cost | €500 | €1,200 |
| Usage cost per cycle | €20 | €15 |
| Lifespan (usage cycles) | 25 | 100 |
| Total maintenance cost | €200 | €300 |
| End-of-life costs | €50 | -€100 (residual value) |
| TCO | €1,250 | €1,900 |
| TCO per use | €50 | €19 |
Although the premium packaging requires a higher initial investment, the TCO per use is significantly lower due to the longer lifespan, lower usage costs and residual value at the end of the life cycle. For a more accurate calculation, you should also take into account the time value of money (net present value) and any risks such as product damage or delays in the supply chain.
A TCO calculation only becomes valuable when its outcome is translated into technical and operational choices. At Faes, we therefore do not start with a material type, a standard case or the lowest unit price. We first assess the complete use case. What loads and conditions will the product encounter during transport, storage and handling? How often will the packaging be used? Where do damage, unnecessary handling, return flows or downtime occur? And which technical requirements and standards must the solution meet?
Our engineers translate these conditions into concrete packaging specifications. We look beyond the exterior and also consider the interior, product positioning and fixation, shock absorption, vibration, sealing, ergonomics and integration with the logistics process. Faes can then produce and assemble the solution and, where necessary, test it or align it with relevant standards and certification requirements. This makes TCO more than a retrospective calculation. It becomes a design criterion from the very beginning.
For reusable packaging, we also consider the entire lifecycle. Maintenance, cleaning, repair, return logistics and wear all influence the level of protection and value a packaging solution provides throughout its service life. A solution is therefore not automatically cost-efficient simply because it lasts a long time. It must continue to perform reliably after repeated use and fit the operational process in which it is deployed.
Sustainable packaging solutions often have a higher purchase price, but can actually save costs in the long term. The impact on your total costs depends on various factors.
Benefits of sustainable packaging materials that influence costs:
The cost impact varies depending on the type of sustainable solution:
Circular packaging is designed for reuse, repair and recycling. Initial costs are on average 30–50% higher than traditional alternatives, but the TCO can be up to 60% lower with intensive use. This is because the costs are spread across multiple usage cycles.
Bio-based materials such as PLA or mycelium may be comparable in price to traditional plastics, but offer advantages in waste disposal. The cost savings here are mainly in the end-of-life phase.
Recycled materials are often cheaper than virgin materials, but may have limitations in terms of strength or application possibilities. The cost savings are usually between 5–15% on material costs.
When conducting a cost-benefit analysis, it is important to look beyond the purchase price alone. Take reusable transport packaging, for example: the higher initial investment is recouped through fewer replacement purchases, lower waste disposal costs and better product protection.
For 2025, we anticipate several trends that will influence the prices of industrial packaging. It is important to factor these developments into your budget planning and TCO calculations.
The key factors that will determine prices in 2025:
Raw material prices remain volatile. The prices of wood, metal and plastic have fluctuated significantly in recent years. For 2025, we expect a moderate increase of 3–5% for traditional materials, whilst bio-based alternatives may actually fall in price due to economies of scale and technological advances.
Labour costs will continue to rise, particularly in Western Europe. This has a direct impact on labour-intensive packaging products such as bespoke flight cases and wooden crates. The expected increase is between 4–7% compared to 2023.
Technological innovations such as automated production processes, 3D printing and smarter design software can help reduce production costs. Companies investing in these areas may be able to keep their prices stable despite rising raw material and labour costs.
Sustainability regulations are having an increasing influence on packaging choices. The expected tightening of EU regulations on packaging waste and recycling will make non-sustainable options more expensive through levies and fines. This creates an additional financial incentive for sustainable alternatives.
Supply chain optimisation remains a key cost driver. Smart packaging solutions that improve transport efficiency and reduce product damage will become increasingly attractive as transport costs rise.
For specific types of industrial packaging, we expect the following price trends in 2025:
By integrating these trends into your TCO calculations in good time, you can make informed decisions about your packaging strategy for the coming years.
Calculating the total cost of industrial packaging requires a broader perspective than just the purchase price. By identifying all cost components and adopting a TCO approach, you can make better decisions that are cost-effective in the long term.
The shift towards more sustainable packaging solutions offers opportunities not only to reduce your carbon footprint, but also to save costs across the entire lifecycle. With the expected price trends for 2025 in mind, now is the time to evaluate your packaging strategy.
At Faes, we understand that every sector and every product presents unique challenges. By considering the right packaging solution early in the process, we can work together to develop packaging that not only provides optimal protection for your products but also contributes to a more efficient and sustainable supply chain.
The optimal lifespan depends on your specific use and supply chain. Analyse how often your packaging is used, the conditions under which it is deployed (temperature, humidity, handling), and the costs of replacement versus maintenance. Carry out a break-even analysis by comparing the initial investment against the savings per usage cycle. For high-value products or frequent shipments, a longer lifespan is usually more cost-effective.
Effective KPIs for packaging strategies include: product damage rate, total packaging costs as a percentage of product value, average number of usage cycles per package, handling time per package, storage space required for packaging, and CO2 emissions per shipment. By measuring these indicators regularly, you can identify opportunities for improvement and demonstrate the ROI of your packaging investments.
Make use of existing transport flows where possible, such as suppliers taking empty packaging back with new deliveries. Consider pooling systems where packaging is shared between different users. Invest in foldable or nestable packaging to minimise return volumes. Implement a track & trace system to prevent loss. Carefully calculate whether the return costs outweigh the savings from reuse compared to single-use packaging.
Thijs Canjels is Business Innovation Manager at Faes and specializes in packaging management and supply chain optimization. In his blogs, he shares insights on efficiency improvements, cost savings and the strategic role of packaging in modern supply chains.
More articles by Thijs CanjelsGood packaging doesn’t just happen by chance. Using a tried-and-tested approach, our specialists guide you step by step from the initial idea to the finished product.
