It always surprises me but this is a question that we get asked regularly. The size of the label is completely up to the individual customer, and it is somewhat dependent on the size of the container that the label is going on. I usually tell people to get the smallest label that will look good. Obviously the smaller the label the less expensive it is going to be.
Having said all that there are some guidelines for label size that we can give you. We use 12" wide material on our digital label printing presses here at Lightning Labels, and the maximum printable area on this material is 10.75". We need to use some of the material for marks that assist in the die-cutting process. As far as length goes we can print up to 17" long. So that leaves a 10.75" x 17" print area that you have to work with. Keep in mind that we do need a gap between labels, and the standard gap is 0.125".
For smaller sized labels you will not notice much difference in pricing with slightly different sizes, but for the larger labels the difference can be significant. Let's take an example that will demonstrate this. A 5" circle fits nicely 2 across and 3 down on what we call a frame (the 10.75" x 17" print area). The cost for 500 5" circles on our standard white BOPP with a gloss laminate is $362.86. Now, let's consider a 6" circle. We can only fit one across and two down - this does not fit very well on our press at all. This is reflected in the pricing - 500 labels cost $528.23 - this is almost 50% more than the 5" circle.
So the answer to the original question is twofold - the best size is the size that will work best on your product and fits well on our press. When you play around with our Online Instant Quoter, you will often notice big jumps in price for similar sized labels. This is always because certain sizes fit well on our press and others do not. If you want to get the best value for your labels always choose a size that fits well within the 10.75" x 17" frame.