Co-Packer Costs: How Much Does It Cost?

Running a food business can be a real challenge, especially once you are serving numerous clients. Of course, an increase in demand is always a cause for celebration. However, this also means ramping your manufacturing process up to meet this demand. 

Producing ingredients, mixing them manually, bottling, and labeling them all by yourself (or your team) won’t cut it anymore. Not to mention the mind-numbing administrative work that comes with this. Fortunately, there’s an effective way to scale your production without investing in industrial infrastructure一and that is by partnering with a trusted co-packing company or co-packer.

A co-packer (contract packager) refers to an established company that can manufacture and package food and food products for partner food businesses. Simply put, businesses in the food industry can outsource their manufacturing and packaging processes to co-packers.

If you’re one of the many start-up owners considering co-packing, your first thoughts would definitely be, “how much does a co-packer cost?”

How do you calculate Co-packer costs?

Contract manufacturers come in different sizes, forms, and expertise. They may provide the same services, but each company varies in the technology, equipment, food handling, processes, and most importantly, the fees they charge. 

However, there are similarities in how co-packers draw up their fee structure. For one, they based it on the type of your product, the complexity of the production process, labor, and the kind of packaging. 

Factors 

The first thing that can affect the cost of a co-packer is the scope of services the client will need.  Some start-up businesses only need help in labor and packaging, while large food companies may rely heavily on co-packing services in manufacturing their product一from, from sourcing their raw materials to packaging them to be sold in the market.

Contract manufacturing offers a flexible and wide range of services, so it’s essential to consider first what you need your co-packer for. Once you identify the scope of services you’ll need, then you can now determine what specific factors can affect the average cost of co-packing.

Here are some of the main factors that can affect the cost of a co-packer:

Raw Materials 

Raw materials refer to basic items, parts, or substances used to manufacture and produce goods. Once processed, raw materials will transform into finished products that can now be sold to consumers. Some of the most common raw materials used in food manufacturing and packaging include:

• Basic food ingredients needed to create your product (e.g., vegetable, starch, palm oil, juice concentrate)
• Processing aids (e.g., gelatin, agar-agar, salt, xylanase)
• Packaging materials (e.g., paper, cardboard, glass)

Raw packing materials differ in prices because some are more easily mass-produced while others are scarce or hard to secure. So essentially, the specific raw material your food product needs to be packed with can significantly impact co-packing costs. 

For example, using commonly used and largely produced packaging materials, like flexible pouches, can certainly make your co-packing cost affordable. But if your raw packaging material is complex or unique, you can expect your co-packing expenses to be higher than the average.

Complexity of Production Process

Each food or food product is processed differently. It can involve one or a combination of a wide array of processes一from the simple ones like washing, grinding, and chopping, to more elaborate processes like pasteurization and vacuum concentrating. There’s also the matter of handling, storage, extraction, and preservation of food products. 

Furthermore, each process is accomplished by using specific machinery or equipment. This means that the more complex your product development and production process is, the higher your co-packer costs will be.

The amount of labor these processes need can also affect the fee charged by your contract manufacturer. Labor-intensive processes that require manual techniques are a lot more expensive than automated ones.

Quantity

Another factor to consider is the quantity of the product you want your co-packer to manufacture. Do you need their co-packing expertise to produce a thousand finished products per day or greater than that? 

Of course, daily mass production means countless production runs and usage of electricity, facility, equipment, and labor. If that’s the case, then expect your co-packing partner to up their charge to cater to the significant amount of products you need.

Types of Packaging

Besides streamlining your production, one of the reasons you may want to hire a co-packer is their expertise. Co-packing companies do not simply assemble, pack out, and deliver your products. A lot of planning and expertise goes into the packaging process to make sure that these food products get into the hands of your customers safely and effectively. For example, your co-packing partner can develop the best type of packaging to keep your goods fresh and delectable without making a dent in your pockets.

There are three types of packaging used in packing food products, but each serves different purposes. These are:

• Primary packaging – also known as the consumer unit, refers to the packaging that comes into direct contact with the food product. It is meant to protect, preserve, and make the product easier to handle for the consumers. Examples include the wrapper of a chocolate bar, the milk carton, or the pouch that houses the cereals.
• Secondary packaging – is used to group or bundle up the products together. It aims to collate smaller products into a single pack to create a stock-keeping unit. Additionally, it is usually made up of multiple parts to efficiently protect the food products during shipping. Some examples include corrugated boxes containing several milk cartons.
• Tertiary packaging – also known as bulk or transit packaging, refers to the packaging that groups the stock keeping unit to safely transport them from the production facility to the point of sale.

Each type of packaging entails different materials, equipment, storage, and labor. This means that the kind of packaging you need will affect your co-packer costs.

Three Ways Co-Packers Charge

Contract packagers offer different types of payment systems to meet the differing needs of their clients in the food industry. Generally, co-packers structure their pricing on three standard options. These are as follows:

Flat Day Rate

The flat day rate refers to the fixed fee charged by co-packers for a full day’s work (8 hours). This means that the co-packing company will manufacture and package as many units as possible during an 8-hour time span.  

Per Unit Rate

The per-unit charging rate means that the co-packer will give you a specific price per unit (individual product) produced and packaged. For example, the cost per unit is $0.30, and if you ordered 1000 units, then payment would be $300.

Of course, the $300 production cost does not include the labor cost and other production fees that your co-packer may charge you with. 

Per Hour

Lastly, co-packagers may also charge a per hour rate for startup companies and clients who need to produce only a small number of products. They usually charge this rate if they can manufacture the number of units required within a few hours. 

The rate can range from $25 to $80 depending on the quantity, processes, and equipment involved in your products’ production.

Conclusion

Collaborating with a contract packager can bring many benefits to your business一from creating cost-effective packaging solutions to safe and scalable efficiency. So, if you are one of the many food companies who want to work with a trusted co-packer, then we’ve got you covered!

Besides sourcing high-quality plant-based ingredients, SunLeaf can also connect you with an established co-packing company that can meet the needs of your business. 

Our network of extensive co-packers follows the strictest food safety protocols and specifications to deliver the best quality to our clients and their consumers.

Contact us so we can help you find the right co-packing partner and determine your co-packer costs. You can also visit our webpage to learn more about what we offer regarding co-packing.