Don't Panic About MOQs: A Business Owner's Guide to Minimum Order Quantities
I’ve seen it time and time again: a new business owner gets excited about a product, only to see a number like "MOQ: 1,000" and immediately lose all hope. The phrase "minimum order quantity" can feel like a brick wall between you and your dream business.
But here’s the secret: it’s not a barrier; it’s a standard part of the manufacturing business. Understanding why MOQs exist and how you can work with them is a key step to becoming a successful brand owner.
Why Manufacturers Have MOQs
Manufacturers aren't trying to scare you away; they're running a business. Here are the core reasons they set MOQs:
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Cost Efficiency: There are significant fixed costs involved in a production run—setting up machinery, mixing ingredients, filling bottles, and cleaning up afterward. Producing a very small batch of 10 units is just as labor-intensive as producing 100 or 500 units. The MOQ ensures the manufacturer can cover their costs and make a profit.
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Ingredient & Packaging Sourcing: Ingredients and packaging are often purchased in bulk from suppliers who have their own MOQs. To make a product, a manufacturer must buy a certain amount of each component, which is passed on to the brand.
Practical Strategies for the New Entrepreneur
As a new business owner, you need a way to navigate MOQs without a massive budget. Here’s how you can approach it:
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Find a Partner with Low MOQs: This is your best first step. Not all manufacturers are created equal. Some specialize in large, enterprise-level orders, while others, like us, are set up to work with small businesses and offer much lower, more flexible MOQs. Look for partners who openly advertise this.
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Negotiate and Be Transparent: Don't be afraid to have an honest conversation. Share your business plan and your growth projections. A manufacturer is more likely to work with you on a lower initial order if they see the potential for a long-term partnership with larger future orders.
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Start with a Core Product: Instead of launching with an entire line of products, focus on one or two "hero" products. By concentrating your initial budget, you can easily meet the MOQ for a single product and get your brand off the ground.
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Consider a Pilot Batch: Sometimes, a manufacturer might be willing to do a pilot or test run. While the cost per unit might be higher for this smaller quantity, it allows you to test the product with your market before committing to a full production run.
Why MOQs Are a Blessing in Disguise
While they seem daunting, MOQs actually help you in the long run. They force you to:
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Plan and Project: You have to think seriously about your business plan and your sales strategy.
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Commit to Your Vision: They're a sign that you are a serious business ready to take the next step.
Don’t let a number scare you away. Find the right manufacturing partner who understands your business needs and can help you create a strategy that fits your budget.
References:
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S.C. Jain. (2007). Marketing Planning & Strategy. VDM Verlag. (Discusses the role of production and manufacturing in a business's overall strategy, including the impact of costs and economies of scale on pricing and minimum order quantities).
Article by: Dahlia Kelada MSHS-INTM, SALVE Founder/CEO, Integrative Medicine Educator, Cosmetic Formulator