Total Cost of Ownership: Reducing Storage & Warehousing Costs With Strategic Packaging Design

Why Warehouse Space Belongs in Your TCO Playbook

Commercial warehouse rents keep climbing—averaging $8.44 per sq ft nationally as of March 2025, up nearly 7% year-over-year. Some markets even top $10 per sq ft—about a 60% jump since Q4 2019. This means that every pallet, rack, and packaging SKU matters. Storing large volumes, oversized packaging, or redundant box and mailer SKUs drives up costs twice—once for the materials, and again for the space they occupy. Focusing on strategic packaging design and on-demand equipment can reclaim that space and turn a fixed overhead line into a controllable lever.

How Packaging Impacts Storage Costs

Bulky or overly varied packaging monopolizes rack space and excess warehouse costs well before products leave the dock. Here are three common ways that extra material consumes valuable square footage:

• Bulky formats: Rigid, non‑nestable materials take up valuable slot locations that could store revenue‑generating inventory. 
• Inventory sprawl: A long tail of sizes, colors, and specialty prints burns pallet positions and complicates WMS logic.
• Safety‑stock overkill: Warehouses often overstock packaging materials to prevent outages during demand spikes. Bulky packaging, such as pre-inflated air void fill, can tie up far more floor space than necessary.

On‑Demand Equipment Shrinks the Footprint

Switching to on-demand packaging systems—where paper, film, bags or foam is expanded right at the pack station—means you store compact packaging materials instead of bulky pre-inflated packaging. For example, dense film rolls are often up to 80% smaller than their pre-made counterparts, cutting a rack’s worth of pallets down to just two. The impact this can make to your operation is major:

• Scale with precision: Your inventory flexes by a few compact materials rather than full pallets, so you can ramp up for peak season or dial back in slower months without renting extra space.
• Customized delivery systems: Choosing modular solutions that can be configured to fit into operations makes the most of your floor space.
• Quick reloads, minimal handling: Streamlining workflows reduce unnecessary movement by delivering materials directly to your operators.Packers swap a roll in seconds, keeping throughput high and eliminating the need to stage spare pallets near the line.

Smart Design Lowers DIM

Thoughtful tweaks—fold-flat mailers, slimmer board grades, tighter pack ratios and reduced waste—remove excess materials, so each final product takes up less warehouse space and avoids dimensional-weight (DIM) surcharges later on. Here are three upgrades that put that idea into practice:

• Thinner, more compact designs: Switching to temporary protective film (TPF) keeps protection intact while trimming dimensional weight—saving money in both storage and shipping.
• Rigid‑to‑flexible swaps: Moving from boxes to flexible cushioned mailers or protective pouches cuts material volume dramatically and nests flat on the shelf. 
• SKU rationalization: Standardizing around a core set of right‑sized formats keeps pallet counts low and simplifies replenishment.
• Use less, waste less: Optimized packaging formats reduce scrap during converting and packing—while also minimizing dimensional weight for leaner shipments.

The Payoff

Less bulk in the warehouse frees up square footage, trims inventory carrying costs, and smooths out peak seasons—maximizing the value of the space you already have.By pairing on‑demand equipment with efficient packaging solutions, operations teams can capture meaningful storage savings without sacrificing protection or speed.

Connect with a Pregis expert for a data‑backed facility audit today. 

Missed the first installments in our TCO blog series? Explore  Part 1 (hidden expenses),  Part  2 (impact of material choices), and  Part 3 (labor efficiencies), and  Part 4 to see how a TCO mindset drives value across your operation.