What is an MOQ and why should I care about it?

online-shopping-1088262_960_720MOQ stands for Minimum Order Quantity. When ordering from a factory, every product has an MOQ.

Why is there an MOQ on my order?

Firstly, factories set up MOQ because often they too have an MOQ from their sub-factories… for ordering the materials, accessories, box, etc. to manufacture your product.

Secondly, only when order quantity meets their MOQ, does the factory realize their own profit on the product they are manufacturing for you.

What happens if I want a quantity lower than MOQ?

When order quantity is lower than MOQ, factories charge you extra because:

  1. If order qty is lower than MOQ, they invest the same (see above about their own MOQ), but their target profit is not met without a surcharge.
  2. They are also asked to pay extra cost by their sub-factories due to not having met their individual MOQs.

Worse than that: many sub-factories are not willing to accept order quantity smaller than MOQ because of poor profit. They simply won’t do it. Therefore it can be very difficult for factories to fulfill your order… in some cases they simply can’t even order the materials.

Take for example, a regular, everyday coffee maker. On average something like this has an MOQ of 1300 pieces. If the factory receives an order quantity of 1000 pieces, utilizing mass production like we do when manufacturing a coffee maker, the factory will invest the exact same manpower, machine power etc., as they would if they were manufacturing 1300 pieces. So the factory will normally simply charge you for the extra 300 pieces on your order, so their profit is where it needs to be in order to remain in business. And the exact same scenario plays out with their sub-factories.

What kind of things will affect MOQ?

  1. Different products have different MOQs.
  1. Like unit price, sometimes MOQ is affected by other aspects such as product’s size, color, material, logo, process method etc.

Let’s use some pens as examples:

plastic ballpoint pen MOQ 1000pcs

metal ball pen MOQ 500pcs

mini novelty plastic fat pen MOQ 5000pcs

Another example of where MOQ can be affected is in the processing, or the way in which the item is manufactured. Both products below need a mold, a tool help to produce the products:

To manufacture a carton box, for example, the die cut/mold is made by laser, its MOQ is very low at about 200-300 pieces.

To manufacture plastic products such as toys, the mold is made of steel and is more complicated, so the MOQ jumps to more than 3000 pieces in a lot of cases.

Even the color you choose can affect MOQ… let’s use carton as an example again:

Kraft (yellow) carton: MOQ 200-300 pieces

White carton:  MOQ 1000 pieces

What happens when quantity is larger than MOQ?

When quantity is much larger than MOQ, I strongly recommend that you bargain for best price. You have some leverage here! Because with a high quantity, the factory is going to do that bargaining on their end to get a much better price from their sub-factories, so accordingly you should bargain with them so some of that savings is passed on to you as well.

Is MOQ the same for all factories? If I order the pen from one factory, will their MOQ be the same as another factory?

It should be the same, but in fact, it is not. A couple of examples:

First, let’s say you go to two different factories and want quotes on manufacturing your pen. Both factories can produce the same item, but in this example, one is large factory and another is small. The basic rule of thumb is that MOQ from large factories is usually higher than small factories. If you don’t want a lot of pens, it might seem counterintuitive not to choose the big guy, but it might make a lot more sense.

Let’s say the two factories are the same size, but one is quite busy with orders and another is not. MOQ is almost always going to be lower from the factory whose pipeline is not quite full.

Third, in some cases, factories have their own technology and machinery to make the product. Because the manufacturing process is different, it is very likely that MOQ will be different too.

And now my head is spinning. Can you help me?

I can help you with this!  I’ve been sourcing products from all over the world for a long time now. I’ve got the relationships, connections, and insider knowledge to help you navigate this very important aspect of production. Don’t find yourself in an MOQ nightmare, call me first!

Factory Direct vs Trading Company

[et_pb_section admin_label=”section”][et_pb_row admin_label=”row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”] Many years ago in China, it was actually quite rare for factories to work directly with buyers from foreign countries.