Should-cost modelling
Price rebuilt from resin or fibre index, yield, waste factor and conversion time. A defensible negotiating floor.
Capability 02 of 06Cost modelling · Sourcing risk · Line performance
Converting & Supply Chain Economics
The invoice price of a pack is rarely what it costs you. We rebuild the number from substrate up, then show where the difference is sitting and what it would take to move it.
- Study formats
- Teardown, benchmark, risk map, network model
- Typical timeline
- 3 to 14 weeks
- Substrates covered
- Board, film, glass, metal, rigid
- Scope
- Resin to retail door
Definition
What is packaging landed cost?
Packaging landed cost is the total cost of a pack delivered to the point of fill, not the price on the converter invoice. It includes substrate, conversion, tooling amortisation, decoration, scrap, freight, warehousing, inventory carry and producer responsibility fees payable in the market of sale.
Almost nobody manages it as one number. Substrate sits with procurement, scrap sits with operations, freight sits with logistics and producer responsibility fees sit with sustainability. Each budget is optimised separately, and the pack gets more expensive in aggregate while every individual line looks like it improved.
We assemble the whole figure for a real format, then test which levers move it. The largest savings are rarely price reductions. They are specification changes nobody costed across departments.
The cost stack
Eight lines make up the price of a pack
Most cost conversations only touch the first two. The remaining six are where the recoverable money sits.
- Substrate
- Grade, gauge, width and yield. Priced per tonne, consumed per pack.
- Conversion
- Run speed, changeover time, web width utilisation and overhead recovery.
- Tooling
- Plates, dies and cylinders, amortised across a volume that is often wrong.
- Decoration
- Print process, colour count, varnish, foil and lamination passes.
- Scrap
- Setup waste, running waste and rejects, at both converter and filler.
- Freight
- Inbound and outbound, charged on cube long before it is charged on weight.
- Warehousing
- Storage, handling and the working capital tied up in minimum order quantities.
- Compliance fees
- Producer responsibility charges, modulated by recyclability, per market.
Proportions are structural, shown for orientation only. They are not benchmarks. Your split is modelled from your own bill of materials and run data.
What we analyse
Three programmes, one cost model
Each addresses a different part of the stack, sharing one model, so a change tested in one shows its consequences in the others.
01
Substrate cost and sourcing risk
Material is the largest single line in most packs and the one most exposed to shocks. We map what you buy, how few people can supply it, and what a switch would genuinely cost once qualification is priced in.
Source concentration
How many qualified suppliers exist per specification, where they sit, and what tariff exposure that creates.
Qualification cost
The real cost of switching substrate: trials, tooling, requalification and volume lost while lines settle.
Index exposure
Which contract clauses pass volatility to you and which absorb it, tested against historic index movement.
02
Conversion and line performance
A specification that runs badly is expensive regardless of its price. We benchmark how packs actually behave on line, at the converter and at the point of fill, where most unrecorded cost accumulates.
Yield and waste
Setup and running waste by format, separated from rejects, so each gets fixed by the right team.
Changeover economics
What each SKU costs in lost line time, and which rationalisation pays once write-off is counted.
Line compatibility
Whether a proposed substrate holds speed on your existing equipment, tested before commitment.
Overhead recovery
How converter overhead is allocated across your volume, and whether you subsidise someone else's short runs.
03
Network, freight and inventory economics
Packaging moves twice before it holds anything, empty and then full. We model the network that carries it and the working capital it consumes while waiting.
Cube and pallet efficiency
How structure, case count and pallet pattern translate into loads shipped, which is what freight bills against.
Footprint modelling
Where converting should sit relative to filling and demand, against freight, lead time and duty.
Inventory and MOQ
Working capital held in packaging stock, and the true cost of the order minimums that put it there.
Damage and returns
What lightweighting saves in material against what it costs in transit damage, netted not separated.
Where cost hides
Six leaks we find in almost every portfolio
None appear as a line item. Each shows up as somebody else's problem, which is why they survive review after review.
| Leak | Why it persists | What resolves it |
|---|---|---|
| Tooling amortised on stale volume | Forecast set at launch and never revisited as the SKU declined | Reamortisation against actual run rate at contract renewal |
| Specification drift | Gauge and grade upgraded over years to solve one-off complaints | Portfolio-wide specification audit against current failure data |
| Cube inefficiency | Freight is charged on space, but packs are designed on shelf appearance | Pallet pattern redesign tested against shelf performance |
| Changeover-heavy mix | SKU count grows by addition, and nothing is ever formally retired | Rationalisation costed with tooling and stock write-off included |
| Unmodulated compliance fees | Producer responsibility charges land in a different budget entirely | Fee modelling per SKU per market, fed back into design |
| Single-source specifications | Nobody has needed an alternative, so none has been qualified | Second-source qualification scheduled before it becomes urgent |
Who uses it
Built for the people who own the number
The same model answers four different questions, depending on which side of the invoice you sit.
Negotiate from cost
A should-cost position built from material, speed and yield, not a market average.
Find the real waste
Setup waste separated from running waste and rejects, so effort lands where the volume is.
Defend the margin
Independent evidence of where your cost sits, for customers who assume there is room.
See it as one number
Landed cost consolidated across procurement, operations, logistics and compliance, the only view that reconciles.
Questions
Frequently asked questions
Why does the cheapest quoted pack often cost more?+
Because the quote covers the converter's scope, not yours. A cheaper substrate can run slower on your filling line, generate more scrap at changeover, cube less efficiently on a pallet, or attract a higher producer responsibility fee. Those costs appear in other budgets, which is why they rarely get compared at the point of decision.
How is this different from procurement benchmarking?+
Procurement benchmarking compares what you pay against what others pay for a similar item. Cost modelling rebuilds the price from the ground up: material yield, web width, run speed, waste factor, tooling life and overhead recovery. It shows what a pack should cost to make, which is a stronger position than a market average.
Can you assess supplier risk without naming our suppliers?+
Yes. Much of the analysis works at the level of substrate, grade and region rather than named vendors. We map how many qualified sources exist for each specification, where they are concentrated geographically, and what the realistic qualification timeline would be if your primary source stopped shipping.
What data do you need from us to start?+
A bill of materials, current specifications and twelve months of volume by SKU covers most of it. Run data, waste logs and freight rates sharpen the model. Where commercial terms cannot be shared, we build the cost side independently and compare only the gap.
How long does a converting economics study take?+
A single-format cost teardown usually runs three to five weeks. Portfolio-wide modelling across multiple formats and markets, or work that includes line trials and yield verification, typically runs eight to fourteen weeks depending on how quickly bill of materials and run data can be assembled.
Find out what your pack actually costs
Send one format and a bill of materials. We come back with a teardown, the gap against should-cost, and the three levers worth pulling first.
Strategic Packaging Insights is a trading name of SRI Consulting Group Ltd, registered in England and Wales, company number 16581261. sales@strategicpackaginginsights.com
Last reviewed: July 2026