Product packaging combines quantity, protection, use, value signal and implicit unit price.
Product packaging combines quantity, protection, use, value signal and implicit unit price. A larger pack can cut packaging cost and increase basket while shifting more profitable sales, creating waste or accelerating consumption. Decision is neither headline price nor margin of the new format: each size must serve a distinct occasion and unit-price gaps must match a real economic gain.
Decision and method.
Launch or change a format only when incremental contribution net of transfers, discounts, costs and waste remains positive for a clearly distinct use occasion. Associate each size with population, frequency, place and consumption duration, checking occasions in purchase behaviour or dedicated research. Calculate unit price, full cost, contribution and implicit discount; inspect jumps to identify dominated levels or excessive incentives. Separate new buyers, higher consumption, transfers from each format and advance purchase; use store or zone experiment when exposure can be controlled. Compare total portfolio contribution before and after under several elasticities and transfer rates; set a stop threshold if mix or waste moves outside expectation.
Worked example.
500g contributes €2.70 on 6,000 sales, 1kg €4.60 on 4,000, 2kg €7.30 on 2,000. Cutting the large pack to €12.90 lowers its contribution to €6.40 and raises sales to 2,500. Before: 6,000 × 2.70 + 4,000 × 4.60 + 2,000 × 7.30 = €49,200. After transfer: 5,850 × 2.70 + 3,700 × 4.60 + 2,500 × 6.40 = €48,815. Five hundred extra large packs hide a €385 loss. Reject the cut unless 2kg contribution exceeds €6.55 or it proves more genuinely new buyers.
Checks and limits.
Every format maps to distinct, measurable occasion; grid publishes unit price, full cost and implicit discount; transferred sales are separate from additional sales; decide on total portfolio contribution. Accelerated consumption can shift future purchases out of period. Waste and preservation are hard to observe in sales alone; transfers vary by channel, household, promotion and shelf visibility.
Resources and sources.
Download the format model. Related: calculate bundle value, measure cannibalisation, design price ladder. Sources: Underwood (2003); Silayoi and Speece (2007); Chandon and Wansink (2006).