How Much Should a Small Business Spend on Packaging?

You've decided your packaging could use an upgrade.

Great.

Then you look at the price.

Suddenly, that plain cardboard box you've been using doesn't seem so bad.

"How much am I actually supposed to spend on packaging?"

It's one of those questions that sounds like it should have a simple answer. Maybe there's a magic percentage of revenue. Maybe there's a standard cost per box. Maybe every successful brand spends exactly 5% of their sales on packaging.

Unfortunately, it doesn't work that neatly.

A candle, a chocolate bar, a luxury skincare product, and a set of ceramic mugs aren't going to have the same packaging needs—or the same packaging budget.

The right packaging budget isn't about spending the most. It's about spending the right amount for your product, your customer, and your stage of growth.

Start With the Product, Not the Box

Before deciding how much to spend on packaging, look at what you're actually selling.

Imagine two small businesses.

The first sells $12 handmade soaps.

The second sells $150 skincare gift sets.

If both businesses spend $4 on packaging, that represents a very different portion of the product's selling price.

That's why packaging budgets shouldn't be based on the box alone.

Packaging is part of your overall cost of goods sold (COGS), alongside things like materials, labor, and distribution. The Massachusetts government, for example, specifically includes packaging costs among the variable costs businesses should account for when calculating gross profit margin.

In other words, don't ask:

"Can I afford a $1.50 box?"

Ask:

"Does spending $1.50 on this packaging make sense for a product I sell for $20?"

That second question gives you a much better starting point.

So What's a Reasonable Packaging Budget?

For ecommerce brands, current industry benchmarks commonly put packaging materials in the range of roughly 1–5% of average order value, with the appropriate amount depending heavily on product margins and positioning. ShipStation, for example, recommends roughly 1–5% of AOV as a starting rule of thumb.

More recent DTC packaging research puts total packaging costs around 3–6% of revenue for healthy mid-market brands, although those businesses are much larger than the typical startup or small business.

So don't look at those numbers and think:

"I need to spend exactly 4%."

You don't.

A percentage is simply a way to check whether your packaging is becoming disproportionately expensive.

For a small business, the more useful question is:

What does my packaging need to accomplish, and what can I reasonably spend to accomplish it?

Think in Cost Per Order

Here's where the math becomes much easier.

Let's say you sell a $30 product.

Your packaging includes:

• A custom printed box: $1.25
• Protective material: $0.20
• A thank-you card: $0.10

Your packaging is costing about $1.55 per order, or roughly 5.2% of the product's selling price.

Is that good?

Maybe.

If that packaging protects a fragile product, makes the brand feel more premium, and creates a better customer experience, $1.55 may be a very reasonable investment.

But if you're selling a $10 product with a $3 packaging cost, that's a completely different story.

The number by itself doesn't tell you whether the packaging is working.

You have to look at what you're getting in return.

Don't Forget the Costs You Can't See on the Box

One of the easiest mistakes small businesses make is looking only at the price printed on the packaging quote.

A box costs $1.00.

Great.

Except that's not necessarily your true packaging cost.

Depending on your business, you may also have:

• Freight
• Inserts
• Tissue or protective materials
• Tape or labels
• Assembly labor
• Storage
• Samples and prototypes
• Setup costs
• Shipping costs affected by package dimensions
• Damaged products caused by inadequate packaging

Recent packaging cost research has highlighted just how different the supplier's unit price can be from the actual cost of getting an order packaged and shipped. One 2026 analysis found that freight, void fill, dimensional-weight charges, and other costs can substantially increase the true per-order cost beyond the price of the box itself.

This is particularly important for ecommerce.

A slightly larger box might only cost you another 20 cents.

But if that extra size pushes the shipment into a higher dimensional-weight category, the shipping bill could increase by considerably more.

Sometimes the cheapest box isn't actually the cheapest packaging.

Quantity Changes the Math

Here's another reason packaging budgets can feel confusing for small businesses:

You don't necessarily get the same price per box as a large brand.

Packaging is often cheaper per unit at higher quantities because production and setup costs can be spread across more pieces. Current industry pricing examples show significant differences between ordering a few hundred units and ordering several thousand.

But there's a catch.

Ordering 5,000 boxes to save a few cents per box doesn't help if you only sell 500 products a year.

You've technically gotten a better unit price.

You've also turned part of your storage space into a cardboard warehouse.

And if you redesign your packaging six months later?

Now you've got 4,000 reminders of your old branding sitting on a shelf.

The cheapest unit price isn't always the cheapest business decision.

For a growing business, cash flow and flexibility can be more important than squeezing every possible penny out of the unit cost.

Where Should You Spend More?

If your budget is limited, you don't need to upgrade everything at once.

Instead, ask:

What part of the packaging will make the biggest difference?

Maybe your current box doesn't protect the product well.

Fix that first.

Maybe the packaging is functional but completely disconnected from your brand.

Improve the design.

Maybe the box fits your product poorly and you're paying to ship empty space.

Look at the structure and dimensions.

Maybe your product is premium and giftable, but the packaging makes it feel like it came from the bottom shelf of a warehouse.

That's when a better material, finish, or structure might be worth considering.

You don't necessarily need foil, embossing, specialty materials, and seven layers of tissue paper.

Sometimes one thoughtful improvement beats five expensive ones.

What About Custom Printed Packaging?

Custom printed packaging doesn't have to mean luxury packaging.

There are plenty of levels between:

Plain box → sticker → printed label → custom printed box → premium custom packaging

The right point on that ladder depends on your business.

If you're just starting out, a sticker or printed label may be perfectly reasonable.

If you're shipping consistently and your brand is established, printing directly on the packaging can create a much more cohesive experience.

If you're selling a premium product, specialized finishes or a custom structure may make sense because the packaging itself is part of the product experience.

The goal isn't to reach the most expensive option.

It's to reach the option that makes sense for where your business is today.

A Simple Way to Set Your Packaging Budget

If you're completely unsure where to start, try this:

Step 1: Calculate your current packaging cost per order.

Include the box, labels, inserts, protective materials, and other packaging supplies.

Step 2: Compare it with your product or average order value.

This gives you context for what you're actually spending.

Step 3: Look at your profit margin.

A packaging upgrade that looks inexpensive on paper can have a very different impact on a low-margin product.

Step 4: Decide what problem you're trying to solve.

Protection?

Branding?

Premium presentation?

Shipping efficiency?

Customer experience?

Step 5: Set your budget around the problem.

If a $0.50 upgrade solves the problem, don't spend $2.

If a $2 upgrade could prevent damaged products or dramatically improve your presentation, don't automatically choose the cheapest option just because it's cheaper.

Packaging should earn its place in your budget.

Ready to Explore Custom Packaging?

If custom packaging makes sense for where your business is today, PrintLab by WEC makes it easy to explore your options without committing to huge quantities. Choose from a variety of packaging styles, customize your design, and order the quantity that makes sense for your business.

[https://printlabbywec.com/collections/shop-all →]

And If You Can't Afford Custom Packaging Yet?

That's okay.

Seriously.

Not every small business needs fully custom printed packaging on day one.

If your business is still growing, focus on creating a product people love, building your brand, and getting your orders out the door.

Your packaging can evolve as your business does.

Maybe today you're using a stock box and a sticker.

Six months from now, you might move to custom printed packaging.

And eventually, you may have the volume to explore custom structures, specialty finishes, or a complete packaging system.

There isn't a deadline.

Your packaging should grow with your business.

The Bottom Line

So, how much should a small business spend on packaging?

There's no universal dollar amount—and that's actually good news.

A reasonable packaging budget depends on your product's price, your margins, your order volume, your shipping requirements, your customers, and the role packaging plays in your brand.

Industry benchmarks can give you a starting point, but they shouldn't dictate your budget.

Instead, ask yourself:

Is my packaging protecting my product?

Is it supporting my brand?

Is it creating the experience my customers expect?

And is the cost reasonable for what I'm selling?

If the answer is yes, your packaging is probably doing its job.

And if the answer is no?

You don't necessarily need to spend more.

You may simply need to spend smarter.

Because the goal isn't to have the most expensive packaging on the shelf.

It's to have packaging that's worth what you're spending on it.

And if you're not ready for custom packaging yet, that's okay too.

Start where your business is today, make the best packaging decision you can with the resources you have, and let it evolve as you grow.

Your business doesn't have to be big to have great packaging. It just has to be ready for it.