How much does it cost to launch your own products?

calculating the cost of private label production with european manufacturers

Breaking down the steps of launching a product line

Contrary to popular belief, launching a product doesn’t have to be expensive. It can be, definitely, if you opt for a super customized product that demands contract manufacturing and want to customize every aspect of it. If that’s not the case, the best option is usually the private label, as it offers a few customizations while keeping the price low and the production time short.

Let’s say you would like to start producing your own Face Moisturizer line. The MOQ for this product is 150 units, and let’s say the retail price for it is 10€. From the 10€ retail price, if you pay 30% of this for the production cost, which is the price you pay to buy from the manufacturer, meaning 3€. So the cost to start the production would be 100 units multiplied by 3€, which equals 450€.

This is without considering the price of sending samples back and forth, the price of delivery, formula customizations, the investment in marketing and branding, and hired employees. If the product is more expensive to produce than 3€, or if the MOQ is higher, then the production gets more expensive.

Overall, the minimum investment you need to start production with a private-label European manufacturer is around 1,000€, getting higher or lower with the variation of lading cost and MOQ.

1. Finding a manufacturer and negotiating MOQs

Finding a manufacturer can be a challenging step when starting a product line. It may seem like the manufacturers are infinite, and it’s impossible to find the perfect one. This can stall the production process for weeks or months until all the negotiation and sampling process is done. This gets even harder if you’re trying to negotiate with people from other countries who might not speak the same language or have the same habits as you.

The minimum order quantity is the lowest number of units a manufacturer is willing to produce and must be one of the first aspects to be negotiated. It exists because, to produce a personalized product, it’s necessary to adapt to the machinery and set up the production line. This is a very costly and time-intense process for the manufacturer. For many products, it is simply too expensive to produce small order quantities because this would either lead to an unattractive price or the manufacturer would lose money before even manufacturing the goods. Therefore, manufacturers have minimum order quantities, and it is important for you to be realistic here as well.

2. Choosing the best kind of production

There is a range of production types you can choose from when starting your product line. Private labels, white labels, and contract manufacturing are common types of production that vary regarding customizations. The different productions have different allowances regarding the personalization process, customizable features, price negotiation, sample availability, etc.

It can be hard to choose the perfect one, and that’s why Wonnda is here to help! But first, let’s understand the difference between the different kinds of production.

Private label

A private label corresponds to a manufacturer who creates customized products for third parties to sell under their brand. In other words, the manufacturer gives you the freedom to choose the formula, customization, or design of the product they manufacture for your brand. This personalized product will then be sold exclusively by this one retailer/re-seller who ordered the product. You get a cheaper kind of production while being able to do certain customizations in your packaging and formula.

White label

White label, on the other hand, does not allow customizations and personalization in the process, meaning you can’t change the formula, size, packaging, or color of your product and will need to choose from the samples the manufacturer already has available. This kind of manufacturing is often cheaper and faster than a private label and contract manufacturing, as the machinery is already set up in the factory, and the only decision to be made is the quantity that will be produced and when they will be delivered.

Even though the white label offers the least personalization of the three kinds of production (private label and contract manufacturing), it is still more personalized than other options, such as drop shipping. Here you can choose the manufacturer (or even better, let us match you to the perfect one), receive samples, and negotiate prices.

Contract manufacturing

Contract manufacturing has the highest cost of them all, as well as a longer production-phase time since all the production line is completely individualized for that one product. The time of production depends on the kind of product and can take up to a year in total. This is the most expensive option, and most of the time, the product that you want to launch doesn’t need that much customization and can be made cheaper through another kind of production.

Contract manufacturers can be challenging to find and negotiate with, especially if the contract manufacturers come from another country that might not speak the same language as yours or have the same culture. On the other hand, if you are an experienced business person and are already used to the hassle of dealing with manufacturers, contract manufacturing might be the perfect option to start a personalized product line, as you can control and customize every aspect of the production to your liking.

3. Samples

It’s normal to have an idea and go running after the manufacturers asking for samples, but samples are one of the last steps of the process. Typically, this is how the process happens:

First of all, you send your request and define, in detail, what the product will look like. Then, once the manufacturer understands what you want and if it’s possible to produce it, they will offer samples. Samples can be free or paid – and it is up to you to test them to see if they are what you pictured or if any changes need to be made.

It’s important to be transparent when giving feedback and respond to the manufacturer as soon as possible. Don’t be afraid to make changes or ask for something different, manufacturers will tell you if your idea is doable or not. They will often react, adapt to your request, and send another version.

Create your private label product line with Wonnda – the European platform for white label, private label, and contract manufacturing

Are you interested in producing your private label products in Europe but don’t know how to get your production up and running? Whether you’re an aspiring startup entrepreneur with an innovative product idea or an existing retailer looking to diversify your assortment with your products, launching your brand through a private label or contract manufacturing could be just the step you need to take your business to the next level.

Here at wonnda, we work with top European producers for private labeling and contract manufacturing. The first step in getting your product to market is probably the most crucial – finding the right production partner for your project. The great advantage of is that you can let us do the heavy lifting. Just tell us quickly about your project or product idea. We will then approach the most suitable producers for your project and connect you with them. Sounds interesting? Then fill out the form!

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