The purchasing question
A packaging budget must reflect the mix of products sold or planned. Different SKUs can use different components, dimensions and suppliers. A simple average unit cost gives misleading results when quantities differ substantially.
Calculation method
For each SKU, multiply the planned finished-unit quantity by its complete scoped packaging cost per unit. Sum SKU subtotals and separately entered order-level costs. Use a quantity-weighted average only when a single summary cost per finished unit is helpful.
Worked example
SKU A plans 100,000 units at €0.20 packaging cost and SKU B plans 20,000 units at €0.50. The budget subtotal is €20,000 + €10,000 = €30,000. Across 120,000 units, the weighted average is €0.25. The unweighted average of €0.35 would overstate that mix by €12,000.
The estimate depends on the entered demand mix. Keep the planning period explicit, and test a scenario where the higher-cost SKU gains share. Shared setup and minimum component purchases may need separate allocation; do not assume every component purchase exactly matches finished-unit demand.
Checks before using the result
- Use a consistent complete-pack cost boundary across SKUs.
- Include each component once in the bill of materials.
- Separate demand quantity from supplier minimum purchase quantity.
Common questions
Can an average cost replace SKU-level budgeting?
A verified weighted average can summarize a known mix. It should not replace SKU-level inputs when the mix or component costs change.