Packaging cost per unit, and whether it belongs in cost per item
Packaging is a few cents to a few dollars on every unit, and it is rarely in the cost on file. Work it out per unit, decide whether it is part of the product or part of shipping, and record it as its own line.
Updated
Two kinds of packaging
Product packaging is what the customer receives as part of the item: the candle’s jar and lid, the printed carton, the swing tag. Without it the product is not finished.
Shipping packaging is what gets the order to the door: the mailer, the outer carton, void fill, tape. It depends on the order, not on the product.
Working it out per unit
| Item | Bought | Paid | Per piece |
|---|---|---|---|
| Printed carton | 5,000 | $1,000.00 | $0.20 |
| Tissue and sticker | 5,000 | $350.00 | $0.07 |
| Mailer | 2,000 | $1,860.00 | $0.93 |
| Per throw | $1.20 |
Include the delivery charge for the packaging itself, and allow for pieces that arrive damaged or get wasted.
Does it belong in cost per item
Shopify’s help center describes cost per item as the price paid for the product excluding shipping and other costs, so nothing forces packaging in. Product packaging usually belongs there, because it is part of what the goods cost. Shipping packaging usually does not.
Recording it in Cogsy
Add a “Packaging” cost kind, charged per unit. Set a shop default if most products use the same materials, and override it on the products that differ. Mark it as included in the cost written to Shopify if you treat it as part of the product.
Questions
- Is packaging part of cost of goods sold?
- Packaging the product is sold in, such as a jar, a printed box or a bottle label, is normally part of the product's cost. Packaging used only to ship an order is usually treated as a fulfilment expense. Confirm with your accountant.
- How do I cost packaging bought in bulk?
- Divide the order total, including its delivery, by the number of usable pieces. 5,000 boxes for $900 plus $100 delivery is $0.20 a box.
Related
Feature
Costs on top of the unit costPackaging, fulfilment or duties per unit, or fees as a percentage of the price, for a variant, a product or the whole shop.
Cost type
Inserts and labelsThank-you cards, care leaflets, barcode labels and hang tags add cents to every unit. How to cost them and decide which belong in the product's cost.
Cost type
Pick and packHow to turn a 3PL's pick and pack fees into a per-unit cost, why the fee belongs in your margin but rarely in Shopify's cost per item, and how bundles change it.
Glossary
Landed costLanded cost is what a product costs by the time it reaches your warehouse: purchase price, freight, insurance, duties and handling. Formula and worked example.