Many commercial printing operations usually only consider ink when ordering inventory for a job -- it may not even show up in the job costing model because the print substrate, press time and changeover drive the lion's share.
Thermochromic, photochromic, glow-in-the-dark and security inks, because they are not commodities, demand extra attention. They can significantly impact pricing to customers -- and profitability for a commercial printer or converter if not accurately estimated and controlled during production.
For instance, a standard metal decorating ink for aluminum cans might cost $10 per pound, whereas a special thermochromic, photochromic or glow-in-the-dark metal deco ink could cost $175 per pound or more.
Why the difference?
Think of specialty inks, like the ones above, as technology delivered through an ink. The ink allows the technology to get on the package. In many cases, that technology took years of research and development to create, qualify and fine-tune for those "ah ha" moments with customers -- whether it's the mountains turning blue on the Coors Light can, or Chester Cheetah's magnifying glass magically revealing an image when sunlight shines on a bag of Cheetos, or a glow-in-the-dark ink on a Día de Muertos (Day of the Dead) chip bag. Smart packaging "theater-in-the-hand" takes some pretty sophisticated chemistry.
With this in mind, designers, production managers and purchasing teams should work hand-in-hand to manage customer expectations upfront to avoid unpleasant surprises after the marketing team has gotten excited.
The first important question:
Whose budget is it?
Often the marketing team will drive a single or seasonal promotion from their advertising budget. Rather than changing the cost of goods (COGs) on the operations side, they make it part of the marketing campaign return-on-investment, just like any other media placement purchase and print cost. Or, if a feature becomes recurring, the cost may be incorporated into the operations budget as a part of the total material and production cost.
The increased cost for a specialty ink promotion can be justified in a several ways:
Media buzz. Sometimes, sparked consumer conversations, media coverage and clicks on popular social media platforms, with an opportunity for entering a sweepstakes or taking advantage of a promotion, can be enough to justify a smart packaging innovation. The next three opportunities all arise from increased public attention.
Revenue lift. For instance, if a convenience store promotes a soft drink with a color-changing feature on a can, with product and placement remaining equal, they can simply measure sales and see revenue lift. What also must be considered are point-of-sale advertising, social media promotion and tie-ins to mass media ads. After all, if nobody knows about the feature, no one will care.
Brand recognition and recall. Going along with revenue lift may be preference of the brand over competitors -- a candy bar with glow-in-the-dark ink may be more attractive for kids at Halloween -- or increased brand awareness again because of supporting advertising, public relations and packaging messaging.
Brand equity. The ultimate: a lasting value to the brand itself. When someone in a restaurant sends a Coors Light back because the mountains aren't blue, the brand has made a special packaging feature part of its platform. Executed well, this can be worth millions of dollars.
So the first step in managing internal stakeholder expectations centers on what and how much budget will cover the smart packaging feature, what metrics will be gathered and the definition of success.
Back of the envelope
Before qualifying with full designs and pilot or production line time, you can roughly estimate the incremental cost of a CTI smart packaging campaign. Key pieces of information include
the estimated design size, in number of square inches or centimeters;
the preferred print method; and
the total print quantity for the campaign time period.
With these facts, you should be able to get within about +/- 20% of the incremental cost based on the CTI technology used. For example, if you wanted to print thermochromic solvent ink on a film food package with a design size of 1.75 square inches and a quantity of 10,000,000 packages. Figure conservatively that each pound of solvent Flexo or Gravure thermochromic ink might yield 100,000 square inches, so that would be a total of 17.5 million square inches of ink and thus 175 pounds of ink needed. If the price per pound of the ink was $105, then the cost of the ink without shipping would be $18,375 or $.0018 per package (or $1.8 per 1,000) incremental cost.
Moving on to a print trial
Most printers or converters will want to run a small trial using a close-to or final graphic design so that they can 1) show what the actual printed and assembled piece will look like; 2) test any technical details, such as ink color at a particular film weight, lamination bond strengths and compliance with safety regulations, etc.; and 3) further refine ink mileage estimates.
With marketing and production approvals, actual prices on purchase orders can start flowing to raw material suppliers, the packaging converter and CTI.
Watch out for hidden costs
In a perfect universe, everything goes smoothly; however, converters and suppliers may be more cautious about trying new ideas, so remember to factor in common risk mitigation that affect new or seasonal campaigns:
Hedging for unknowns. Let's face it. If a converter or supplier has a great working relationship and history with a brand, introducing a new innovation can be seen as increasing risk for a highly efficient, tried-and-true production process. To cover this perceived risk, converters might mark-up a specialty ink much more than a normal component. Ask for transparency about concerns about production efficiency if the price seems higher than expected. CTI has 26 years of experience advising on press clean-up, set-up and ink handling, not to mention developing press-ready inks in solvent-based formats. Often, a frank discussion and completed qualification trial will allay fears of cost overruns.
Inventory. Especially for single or seasonal campaigns, inventory planners may want to ensure that the production team uses nearly all of the specialty ink purchased, minimizing waste. A solid production forecast helps CTI produce press-ready ink quantities just-in-time, then during production, a final purchase order based on actual consumption rates ensures that hardly any ink will be leftover or discarded. As well, the shelf-life of any remaining ink for a future campaign should be noted -- metal decorating, offset and UV Flexo inks may last for up to 12 months, whereas water-based Flexo or Gravure inks may only last six months. Some sensitive colors may have even shorter shelf-life.
At CTI, we've supported thousands of large production runs, providing technology solutions, design, qualification support, production and continuous improvement. That’s why the world’s biggest brands turn to CTI when they want to wow customers with first-ever packing innovations: They know the technology will work, it’s safe and CTI can support a global supply chain.
Contact our experts today to help you plan, qualify and launch a major campaign or ongoing smart packaging feature using thermochromic, photochromic, glow-in-the-dark or security technology.