Posted on by Elspeth Devine

For luxury brands, packaging plays a pivotal role in the customer experience, forming an extension of your product and overall brand image. The amount of your production budget you invest in luxury packaging design should align with your positioning and meet discerning customer expectations. While traditionally, packaging was viewed as an extra that reduced margins without adding value to the product, contemporary retail philosophy recognises the value of luxury packaging in enhancing the customer experience, strengthening retention, and eliciting more new business through unboxing videos and reviews on social media.

In this article, we’ll look at the factors that help you determine the "right" budget to align with your income targets and profit margins.



Specific product details

Consider product features like size, weight, fragility, and more. Larger, heavier, or particularly delicate items naturally require more protective and functional materials and construction, affecting the cost. This cost may be worthwhile if it reduces the risk of damage in transit or a negative customer impression from a damaged or broken product.

Target Luxury customer profile

Get very clear on the needs and expectations of your ideal high-end buyer. What do they expect and value from luxury branding and unboxing experiences? Top-tier luxury shoppers have elevated demands for ultra-premium packaging finishes and details, especially when buying premium products, such as alcoholic drinks, jewellery, and cosmetics, as gift items for friends and family. Investing extra money in luxury packaging for your gift items may increase your sales revenues by boosting your total number of sales, even if the margin on individual products is reduced.

Overall brand positioning strategy

Your brand identity and positioning should inform packaging choices. A brand emphasising exclusivity and prestige needs packaging that aligns with this ethos. Lower grade materials may detract from the luxury aesthetic of such brands. On the other hand, luxury brands that promote their eco-conscious and sustainable values may have more flexibility in choosing less pricey packaging materials – as long as there is no compromise on quality and the standard of packaging protection.

Value for money

Consumers in the luxury product market are prepared to pay a premium for packaging, but only up to a point. If the impression is that too much money has been spent on packaging, so that it unnecessarily inflates the cost of the product, then your brand reputation and sales may be affected. It’s important to ensure that the cost of your packaging is in proportion to the retail value of the item and does not make your brand vulnerable to suggestions of waste or extravagance.

So, what percentage of the retail price should you allot to packaging costs?

On average, brands spend between 1-10% of the product value on packaging. Mainstream consumer brands trend closer to the middle and lower end of the range, while luxury packaging design warrants higher investment and tends to fall closer to the top of the range and sometimes even exceeds it. The key is understanding and exceeding customer expectations.

Maximising return on your packaging investment

With luxury packaging, higher investment should equal a higher impact. Therefore, ensure your packaging budget is allocated strategically to deliver tangible results. Some strategies include:

  • Bespoke, innovative structural designs: Unique shapes, folding/opening mechanisms, and meticulously fitted bespoke inserts take unboxing experiences to the next level while showcasing products attractively.
  • Ultra-premium materials: Use top-tier quality materials like textured, thick paper stocks, soft-touch matte lamination, spot UV accents, and foil stamping. This achieves luxury tactile and visual aesthetics.
  • Eco-friendly, sustainable materials: Today's consumers expect environmental sustainability practices across the entire brand experience. With 69% of consumers stating they would be more likely to order again from a business if it uses an eco-friendly luxury brand packaging design, it makes business sense to conform.
  • Striking, impactful visuals: Eye-catching graphics, cool slogans, immersive themes, and bold typography attract high-end shoppers and make products irresistible while reinforcing brand identity.

Work with the packaging design experts at Kudos Giftwrap for a luxury experience

Luxury packaging is a strategic investment in your brand's future success and customer relationships. From driving loyalty to showcasing quality, the potential returns on investment are immense. Reach out to Kudos Giftwrap today so we can work together to engage your customers on a deeper brand level through bespoke luxury brand packaging design.


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Image source: Canva