Minimum Order Quantities (MOQs) & Other Considerations

What are your MOQ’s ?

This is always a question new clients ask and not one with a single simple answer.

There are so many elements to take into consideration. I am going to illustrate a few for you  to consider.

MIX Sizes

Firstly is the product going to be a hot mix or a cold mix….generally hot mixes are needed to make creams and lotions.

They require equipment with paddles that do the mixing and there needs to be enough bulk to cover the paddles so that the product mixes as it should.

Mix sizes depend on the equipment in the factory mostly this starts around the 200 kilo size.

Once the bulk leaves the mixer it will need to go into the filling equipment to fill whatever bottle, jar or tube you have decided upon.

The equipment needs to be spotless before your job is started and again after it is finished so efficient set up and clean down are imperative for GMP or good manufacturing practice.

Housekeeping

There is a cost involved in doing this…let’s call it housekeeping, for want of a better expression.

Imagine the hours it takes several people to do this with pipework, filling nozzles, drums and the like …if this for arguments sake costs £500 in man hours used then consider the affect this has on run size.

So, if you are wanting a small run of maybe just 1k or even 500 units …then using the figures above the housekeeping alone without any product works out at .50p or £1 a piece respectively.

You also lose bulk when undertaking ‘housekeeping and on small runs this represents a large percentage of the whole.

Again these both affect prices for run sizes.

Cartons and Labels

Printed Cartons and Labels for product are another element which is affected by MOQ…if you ask for a price from a printer for 500 labels or cartons the price you will get is probably the same as you would pay for 2k as  the costs are all in set up and once the machinery is running label/ carton costs themselves are only an almost insignificant cost.

We also lose as many as 50 setting up labelling equipment and the same shutting down so you can see if you are running just 500 this is 20% loss a high ratio which on a 5k unit run would barely register.

Each factory we use has different winding specifications for their equipment once it is decided which factory you will be using you will need to be advised which spec to request from your supplier.

Labels need to be wound on reels to be machine applied not on sheets which can only be hand applied.

Componentry

Bottle, jar, tube suppliers all have MOQ’s and some companies only offer large quantities;  so 10 or 20k units and other companies specialise in smaller runs, which will undoubtedly cost more, but will not require such huge stock holding by your brand.

After you start working with us we can advise where best to try for whatever you are looking for.

Tubes

Small runs of Tubes generally need to come from outside the UK and will have long lead times.

Generally due to set up costs once again we don’t look to run less than 3k tubes at a time beneath this number its just not economically viable.

Sample Sizes

Always consider the need for something to send out or give away as samples to press, retail or your end consumer.

Do this when we start work on your full sized products so that the bulk can be bought at the same time and not trip you up on raw material MOQ’s should you request them after the full sized variants.

Raw Materials

As we keep many materials in stock but generally need to use a number of new materials when we undertake ‘blue sky’ development there will be MOQ’s from the raw material suppliers.

Small runs for you may mean we need as little as a few grams but may be expected to buy 5,25 or 50kilos or even more.

These days suppliers and manufacturers of raw materials are asking for us to buy bigger quantities to prevent them carrying stock that is not committed and ending up with excess inventory themselves.

The problem with this is that we end up with the same issue. This therefore is an important  subject for discussion so that we can minimise both our exposure and your cost.

Sometimes the client will buy that material through us and will then, what’s known as, ‘free issue’ it in other words we will get it sent to the factory who hold it for them ready for future and further productions.

Other times we have to take the total costs and amortise it into the first run which means that run is more expensive but future runs are cheaper since its already in stock.

It will not usually be all materials since we carry a palette of basics but the unusual ones that are going to give you something outside of the ordinary to use in marketing invariably will be the culprits.

Specialist ‘active’ raw materials may also be incredibly expensive …we have just used a peptide for a client which costs £1000 a kilo and we need to use a very small amount so you can see how these things add up and cause a problem.

Fragrances

These also have associated issues since they very often are used at very low percentages and there are very few companies who will supply as with small amounts of bespoke fragrance.

We have recently had to buy an MOQ of 25kilos for a clients bespoke fragrance which had been previously purchased in 5 kilo quantities.

We do have one supplier who will allow us to develop and buy just 3 kilos of bespoke fragrance hence the need to consider this when we start working.

Essential Oil blends are generally much easier since they can be bought as a commodity in smaller quantities and potentially blended either by the supplier or in manufacture …unless you require Organic since Organic Oils generally have to be bought in larger quantities.

Cardboard Shipping Outers

When considering how you are going to sell your product then you will need to consider how we ship them to you.

If you are hoping to sell to retail you will need a standard box size….you cannot ship 12’s one day and 14’s another or mix up what you ship in a consignment to the retailer …their stock control will not be able to cope. If you are bar coding the stock then this will not work either since outer case bar codes denote how many units are contained.

Cardboard shipping cartons are the last thing that you would expect to be a problem but in fact if you want a specific size then we have to buy them cut to this size!

So if you want to specify a bespoke carton be aware that this may have a considerable cost.

If you are ordering 500 or 1k units of a finished product and require a carton that will hold just 12 we will only need 42 boxes ….I get prices from the suppliers that give a price per thousand …there are costs for cutters each new size that is requested …add these altogether and you end up with a very expensive cardboard box.

Stay flexible and we may be able to use a cutter in existence and a box we already buy but you may have to take product in 8’s or 15’s and there may need to be a layer of packing.

To illustrate this if we are filling 5k units and you want an outer for 6 units which is a common retail sized outer we are still not going to want 1k units so the cardboard suppliers charge us a special premium for a small run which is obviously even worse if you want what 250 units would require.

I recently costed a bespoke cardboard outer into a product and I had to add 40p a single unit into the costs …a huge figure for the lowliest of commodities. In other words the box for 6 was going to cost £2.40.

We used to buy bigger numbers to get the price per unit down but have ended up having to pay to clear cardboard that hasn’t been used years later and of course it is our cash that is tied up in these and any company accountant will advise against this.

Marketing Trial Samples

Many of you ask if we can make small numbers in the lab and yes we can …but the lab is similar to a large kitchen and the quantities of raw materials held are very small; often just a few grams nothing in big amounts since we don’t have the storage space.

So when you need a marketing trIal we may be able to make 10 or 12 samples for you to use for feedback but 50 is usually pushing it a bit far since we wouldn’t have sufficient raw materials in stock and the suppliers samples aren’t that large.

So by all means ask us but please read this before hand.

 

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