Setup and Tooling Costs in Custom Packaging Orders

Understanding Setup and Tooling Costs

When sourcing custom packaging, procurement managers often encounter line items for “setup costs” or “tooling” in their initial quotes. These are essential investments required to transition a digital design into a physical product. While they increase the cost of the first order, these assets are generally reused for subsequent production runs of the same design, effectively reducing the per-unit cost over time [1].

Core Components of Setup Costs

Setup costs can be categorized into digital preparation (reprographics) and physical tooling. Depending on the supplier, these may be listed as separate fees or bundled into a single “origination fee” [1].

Reprographic Charges

Reprographics refer to the process of making artwork “print-ready.” This involves professional adjustments to ensure colors, bleed lines, and resolutions are correct for the specific printing press being used. The cost covers the time and expertise of the supplier’s prepress team [1].

• Approximate Cost: £40 – £200 [1].

Tooling: Print Plates and Screens

Tooling refers to the physical objects required to reproduce a design accurately. The type of tooling depends heavily on the printing method chosen:

• Flexographic Printing: Requires print plates (also called stereos). A separate plate is required for every color used in the design. These are reused over time but may eventually wear out if millions of units are produced [1].
• Lithographic (Offset) Printing: Plates are typically created for each individual production run. Because of this, the cost is often amortized into the unit price rather than listed as a separate one-time fee [1].
• Screen Printing: Uses screens, which generally have a lower setup cost compared to flexographic plates [1].

Estimated Costs: Flexographic plates typically range from £40 to £400 per color [1]. For flexible packaging such as labels or shrink sleeves, these costs are often lower, around £40 per color [1].

Tooling: Cutting Dies and Moulds

Beyond printing, the physical shape of the packaging requires specific tooling to ensure consistency and precision:

• Cutting Dies (Formes): Used for paper packaging, mailer boxes, and cartonboard. These are sheets containing blades that cut away waste material and creases that guide the folding process. The cost is primarily driven by the size of the die; larger dies are more expensive [1].
• Moulds: Essential for plastic bottles, molded pulp, or paper tube packaging. These act as the “template” that shapes the final object [1].

Worked Example: Estimating First-Order Setup

Note: The following scenario is illustrative and based on typical cost ranges provided in source [1].

Scenario: A company orders a custom flexographic mailer box with a 4-color design.

In this example, the first order carries a £1,550 premium. However, if the company re-orders the same design, they would typically only pay for the unit cost of the boxes, as the plates and dies are already manufactured and stored by the supplier.

Commercial Considerations and Planning

Understanding the nature of tooling is critical for long-term budget planning and design agility:

• Design Changes: Because plates and dies are physical objects, any change to the artwork, dimensions, or colors in future productions will trigger new setup and tooling charges [1].
• Amortization: For high-volume orders, the impact of setup costs is negligible. For low-volume orders, these costs can significantly inflate the initial cost per unit.
• Supplier Terms: It is important to clarify whether the supplier owns the tooling or if the client can pay to have the plates and dies transferred to another vendor.