It is important to recognize that there is a big difference between the price of a label and the total cost of the labeling technology or system.
Taking a holistic view of the costs associated with different product decoration technologies can significantly influence the selection of a decoration or labeling method.
Here we aim to provide the reader with a greater understanding of the concept of ‘total applied cost’ and will help them to make more informed decisions.
There are many instances where making a straight comparison of label prices is valid, but end users need to look at the whole picture in order to make a full and realistic assessment of the costs of product decoration.
From a supplier’s perspective, encouraging end users to widen their view can also open up new opportunities to present a more compelling case for their products.
EXPLAINING THE CONCEPT OF 'TOTAL APPLIED COST'
The total cost of a label is not merely the cost of the material and its conversion…there is a much wider range of factors at play. Customers trying to make comparisons between a wet-glue and a self-adhesive label or a shrink sleeve and an in-mold label, for example, would be naïve to make a decision based on simple price per thousand comparisons.
In-mold and direct decoration, for example, often require the user to store large quantities of pre-labeled containers on-site, in order to cope with the flows of demand across a number of variants. Storage, inventory and obsolescence are all part of the labeling cost and have to be considered at the very start when decisions are being taken as to how a product will be produced, presented and marketed.
Likewise the cost of application equipment, manning levels and labeling efficiencies are likely to be key components of the cost equation.
The concept of total applied cost encompasses all costs attributed to the labeling process from start to finish. Evaluating different decoration methods using this wider definition of costing can dramatically influence the selection process.
BASIC COSTING
Material content is an important factor in the price per ‘000 and can comprise up to 70 percent+ of the price of the labels, dependent on the form of decoration used. Generally those labeling systems that rely heavily on paper based substrates such as wet-glue labeling, will compare favourably to laminate structures such as self-adhesive systems that include the cost of the liner and the adhesive.
Direct printed containers also tend to have high price per thousand, but offer significant benefits on the filling line because no further labeling operation in required. Printing and conversion costs such as repro, tooling, embellishments, finishing and packing materials are also factored into the price per thousand.
Figure 9.1 compares the basic price per thousand (material/print/conversion) for a basic paper label (achievable by wet-glue and self-adhesive methods only).
As one might expect when making a comparison on a price per thousand basis, the wet-glue label format clearly demonstrates a significant price advantage over self-adhesive.
APPLICATION EQUIPMENT
Application equipment is a major cost factor contributing to the cost of labeling a pack.
Investment costs for wet-glue and self-adhesive application equipment tend to be comparable. Sleeving involves both an application system and additional shrink tunnels and although cost effective may require more than one applicator per line to achieve equivalent application speeds.
Consideration must be also be given to the high capital expenditure required for in-mold labeling equipment (by the molder).
When a number of different labels are being applied on the same line then the picture is more complex.
Down-time incurred when changing between variants will be reflected in increased labor costs and loss of productivity. Self-adhesive is generally considered to be the most versatile and flexible label system when it comes to multi-variant labeling because reels can be easily changed, down times are less and they often involve fewer people on the line. Digital direct decoration methods offer significant advantages for jobs that have a large number of variants or require personalization.
Rapid changing with in-mold and some direct print decoration can be carried out on the filling line but can require considerable logistic and inventory control (resulting from the storage and use of pre-decorated containers).
Adopting flexible packaging formats can offer considerable cost benefits in that no secondary labeling is required, with the primary packaging doubling as the decorative carrier of branding. This decorative system however, is commonly integrated with the product filling operation.
CUSTOMER CASE STUDY
A revealing case study into the cost of labeling also stemmed from the work conducted by 4impression on behalf of FINAT.
The analysis looked at the actual calculations and the decision making process adopted by an end user in the high quality beverages sector.
The decision to select either wet-glue or self-adhesive labeling for their containers was based on an assessment of applicator costs, change parts for each label variant, adhesive costs, operative costs and changeover costs. A breakdown of comparative costs for this user are highlighted in Figure 9.3.
APPLICATION EQUIPMENT
Application equipment is a major cost factor contributing to the cost of labeling a pack.
Investment costs for wet-glue and self-adhesive application equipment tend to be comparable. Sleeving involves both an application system and additional shrink tunnels and although cost effective may require more than one applicator per line to achieve equivalent application speeds.
Consideration must be also be given to the high capital expenditure required for in-mold labeling equipment (by the molder).
When a number of different labels are being applied on the same line then the picture is more complex.
Down-time incurred when changing between variants will be reflected in increased labor costs and loss of productivity. Self-adhesive is generally considered to be the most versatile and flexible label system when it comes to multi-variant labeling because reels can be easily changed, down times are less and they often involve fewer people on the line. Digital direct decoration methods offer significant advantages for jobs that have a large number of variants or require personalization.
Rapid changing with in-mold and some direct print decoration can be carried out on the filling line but can require considerable logistic and inventory control (resulting from the storage and use of pre-decorated containers).
Adopting flexible packaging formats can offer considerable cost benefits in that no secondary labeling is required, with the primary packaging doubling as the decorative carrier of branding. This decorative system however, is commonly integrated with the product filling operation.
CUSTOMER CASE STUDY
A revealing case study into the cost of labeling also stemmed from the work conducted by 4impression on behalf of FINAT.
The analysis looked at the actual calculations and the decision making process adopted by an end user in the high quality beverages sector.
The decision to select either wet-glue or self-adhesive labeling for their containers was based on an assessment of applicator costs, change parts for each label variant, adhesive costs, operative costs and changeover costs. A breakdown of comparative costs for this user are highlighted in Figure 9.3.
