If you've ever calculated the cost of your in-house multipack assembly, there's a good chance you've underestimated it.
Not because your team is bad at math. The issue is that most cost spreadsheets miss the expenses that don't show up on a purchase order. The overtime surge in October. The production line that sat idle in February. The retailer chargeback that took three months to resolve.
After working with CPG brands for over seven decades, we've seen this pattern many times with snack food manufacturers, confectionery companies, and other food producers. Companies believe in-house multipack assembly costs them $X per unit, when the real number is often 40% higher. That gap can mean the difference between a profitable product line and one that quietly drains margin quarter after quarter.
Here's what most brands miss, and how to know when outsourcing makes more financial sense than keeping secondary packaging in-house.
When most brands calculate in-house costs, they include the obvious line items. Direct labor hours. Materials. Maybe a percentage allocation for equipment. That math usually looks reasonable on paper.
But in-house secondary packaging has three layers of cost.
Direct costs are what you see. Hourly wages, benefits, materials, packaging supplies. These are real, measurable, and probably accurate in your current calculations.
Indirect costs are the overhead you might under allocate. The floor space your multipack line occupies carries rent or a carrying cost. Utilities and climate control add up. Supervisory time and administrative work often get spread across too many cost centers to show the true burden.
Hidden costs are the ones that rarely make it to the spreadsheet. The opportunity cost of tying up equipment that could run higher-margin products. The quality issues that emerge during seasonal surges. The compliance burden of maintaining certifications across every process in your facility.
When brands run a true cost analysis that captures all three layers, in-house secondary packaging frequently costs 30-50% more than the number they've been using for planning.
Multipack assembly demand isn't flat, especially for snack food brands. Halloween creates a spike. Holiday programs create another. Back-to-school, game day promotions, and retailer-specific programs all add variability that your staffing model wasn't designed to handle.
The result is overtime during surges, often at 1.5x the normal rate. Temporary workers need training time and produce lower quality until they're up to speed. Quality control issues tend to increase during your highest-volume periods, exactly when you can least afford rework.
If your multipack volume swings more than 30% between peak and off-peak, you're almost certainly paying a labor surge premium that doesn't appear in your standard cost-per-unit calculation.
Every time you reconfigure a line from one SKU to another, you lose production time. For multipack assembly, this happens constantly. Different flavor combinations, different pack configurations, different retailer specifications.
That changeover time has two costs. The direct cost of the time itself, with labor being paid while nothing is produced. And the opportunity cost of what that line could have been running instead.
For brands running multiple configurations, changeover downtime can consume 10-15% of available production hours. That's not visible in your per-unit cost, but it's very real in your capacity constraints.
Retailer specifications for multipacks are precise, and they vary by retailer. Costco wants different configurations than Walmart. Target has different labeling requirements than regional grocery chains.
When a pack doesn't meet spec, you have three options. Rework it, which costs labor. Scrap it, which wastes materials. Or ship it and risk a chargeback, which damages both the relationship and your margin.
We've seen brands absorb 3-5% waste rates on in-house multipack/bundling assembly and consider that normal. Over a million units annually, that's 30,000-50,000 units of materials, labor, and margin lost to inconsistency.
Multipack assembly requires specialized equipment. Shrink tunnels, bundling machines, case erectors, labeling systems. That equipment requires capital, whether purchased outright or leased, plus maintenance, calibration, and eventual replacement.
Here's the challenge. If your multipack volume is seasonal, that equipment sits idle during off-peak months. You're carrying the depreciation, maintenance, and floor space cost year-round for equipment that might operate at full capacity only four months per year.
The math often works out to paying for equipment 12 months a year to use it 4-6 months a year. That's a 50-65% equipment cost premium that doesn't show up in per-unit calculations.
Maintaining certifications like SQF, FDA registration, and retailer-specific audits isn't just about the audit itself. It's the documentation overhead, the process controls, the training requirements, and the management attention that compliance demands.
Every process in your facility that touches product falls under those certification requirements, including multipack assembly. That means more documentation, more audit scope, and more risk of compliance gaps that could affect your entire operation.
For some brands, the compliance burden of in-house secondary packaging is a hidden tax on their quality and operations teams that never gets allocated to the product lines creating the work.
This is the cost most brands never calculate, because it requires asking an uncomfortable question. What else could you be doing with those resources?
The floor space occupied by multipack assembly could produce higher-margin primary products. The labor hours could support new product launches. The management attention could focus on operational improvements that drive competitive advantage.
When you tie up production capacity with secondary packaging, you're not just paying for what you're doing. You're paying for what you're not doing. That opportunity cost is real, even if it never shows up on a financial statement.
Despite everything above, in-house multipack assembly is sometimes the right choice. Here's how to know.
In-house makes sense when:
Your volume is high and consistent, not seasonal. You have excess capacity that would otherwise sit idle. Your multipack processes are proprietary or highly specialized. You've already invested in equipment and have years of useful life remaining. Your multipack configurations rarely change, and you want to invest time and capital on this as part of your business focus.
Outsourcing makes sense when:
Demand is seasonal or unpredictable. You're launching new SKUs and need speed-to-market. Retailer programs require specialized configurations like club packs or promotional displays. Your internal lines are at or near capacity with higher-margin products. You need certifications that your facility doesn't carry, such as Kosher or specific allergen controls. You want flexibility to scale up and down without carrying fixed costs.
The hybrid approach:
Many brands find the best model is keeping core assembly in-house while outsourcing seasonal surges, retailer-specific programs, and new SKU launches to a contract packaging partner. This captures the efficiency of in-house production while avoiding the hidden costs of trying to handle peak variability internally.
If you're evaluating outsourcing, the partner you choose matters enormously. A contract packager with compliance gaps or communication problems will create more headaches than they solve.
Certifications that match your needs. Most contract packagers carry one or two basic certifications. If your products require SQF Level 2, FDA registration, Kosher certification, allergen control programs, or ethical sourcing documentation like SEDEX, verify your partner has them and that those certifications are current.
Look for partners with a robust certification portfolio that matches your retail requirements. It signals operational maturity and reduces the risk of discovering a compliance gap after you've committed to a program. The Contract Packaging Association provides additional resources for evaluating potential partners.
Flexible capacity. You need a partner who can handle both small test runs of 100-500 units for retail pilots and large-scale programs of hundreds of thousands of units for seasonal surges. Some contract packagers optimize for high volume and won't touch smaller projects. Others focus on short runs and can't scale when you need them to.
The best partners are built for variability, because that's exactly why you're outsourcing.
Communication and reliability. Secondary packaging isn't your core business, so you need a partner who treats communication as seriously as production. Weekly updates, proactive issue identification, and a commitment to no surprises. Ask about their communication cadence and what happens when something goes wrong, because something eventually will.
Geographic proximity. Logistics costs and lead times matter. A partner across the country might quote lower prices, but freight costs and transit time can erase that advantage. Regional partners reduce shipping complexity and give you more flexibility on timing.
If you want to evaluate your actual in-house cost, here's a framework.
Direct costs per unit: Labor hours multiplied by hourly rate plus benefits load. Materials and packaging supplies. Direct equipment allocation.
Indirect costs per unit: Floor space cost divided by annual units. Utilities allocation. Supervisory and administrative time. Quality control overhead.
Hidden costs per unit: Rework and waste percentage multiplied by unit cost. Overtime premium during surges. Equipment idle time cost divided by units produced. Estimated opportunity cost of capacity.
True cost per unit = Direct + Indirect + Hidden
For most brands, indirect and hidden costs add 30-50% to the direct cost calculation. If your current per-unit assumption doesn't include those layers, you're making strategic decisions based on incomplete information.
Direct costs alone typically range from $0.15 to $0.50 per unit depending on complexity, volume, and labor rates. But direct costs only tell part of the story. When you add indirect costs like floor space, utilities, and overhead allocation, plus hidden costs like overtime surges, rework, equipment underutilization, and opportunity cost, true costs often reach $0.25 to $0.80 per unit or higher. The brands most likely to underestimate are those with seasonal volume patterns. The fixed costs spread across fewer units during off-peak months, which inflates true per-unit cost significantly. Before making outsourcing decisions, run a complete cost analysis that captures all three cost layers rather than relying on direct costs alone.
The clearest triggers are seasonal variability and capacity constraints. For snack food and confectionery brands specifically, seasonal variability makes this calculation even more critical. If your multipack demand swings more than 30% between peak and off-peak periods, you're paying a surge premium that outsourcing can help address. If your primary production lines are at capacity and adding secondary packaging would require expansion, the math often favors outsourcing. Other triggers include new SKU launches where speed-to-market matters more than cost optimization, retailer-specific programs where a partner's expertise reduces compliance risk, and certification gaps where your facility lacks credentials like Kosher or specific allergen controls that retailers require.
The certifications that matter depend on your products and retail channels. SQF Level 2 or equivalent GFSI certification is increasingly expected by major retailers like Walmart, Costco, and Target. FDA registration is required for any food contact. Beyond those basics, Kosher certification matters for products sold in kosher sections or to kosher consumers. Allergen control programs are critical if your products contain or are processed near major allergens. SEDEX membership signals ethical supply chain practices, which major brands increasingly require of their partners. AIB International certification provides additional third-party validation of food safety practices. Look for partners with a robust certification portfolio that matches your retail requirements. It indicates operational maturity and reduces the risk of compliance gaps affecting your supply chain.
Start with your true in-house cost per unit, including indirect and hidden costs. Compare that to the quoted per-unit cost from an outsourcing partner, adding logistics costs for shipping materials and finished goods. The difference is your direct cost savings or premium. Then factor in the qualitative benefits. Freed-up capacity for higher-margin production. Eliminated seasonal labor challenges. Reduced compliance burden. Faster speed-to-market for new programs. For most brands, outsourcing costs roughly the same or slightly more on a pure per-unit basis, but delivers significant value through flexibility, risk reduction, and freed capacity. The ROI calculation should weigh all factors, not just the per-unit comparison.
In-house multipack assembly isn't always the wrong choice, but it's frequently more expensive than the numbers suggest. The brands that make the best decisions are the ones that calculate true costs honestly, including the hidden costs that don't show up on purchase orders.
Whether you keep secondary packaging in-house, outsource entirely, or build a hybrid model, the right answer depends on your specific volume patterns, capacity constraints, and strategic priorities. What matters is making that decision with complete information.
Want to see how your costs compare? Our packaging experts can review your current setup and provide a no-obligation cost analysis, even if you decide to keep everything in-house. We've been helping CPG brands make these decisions for over 70 years, and we're happy to share what we've learned.
See how we help snack food brands handle secondary packaging without the hidden costs:
→ Snack Food Secondary Packaging Services
or- get in touch with our team today and compare your costs