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What You Should Know About Manufacturing |
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Written by Lisa Lloyd
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The manufacturing process is fairly straight forward. It is the job of the professional you hire to make your product on your behalf to know the details of the manufacturing process and simply provide you with a quote. However, here are a few quick tips that could help you save time and money on this process.
- Get at least 3 quotes. It is nice to work with people you like and it is also nice when you think you have been quoted a reasonable price. However, aiming for both could save you a tremendous amount of money and heartache in the end. The best price is not the only qualifier for a good manufacturer. Knowing how good their reputation is for being on time, the quality of their goods and where their price breaks are could all play a roll in your final decision.
- Find out what volume will provide price breaks. This is also good if you are simply investigating the cost of goods for your business plan. It will help you strategically plan your retail price. For example, you may get a quote of $1.20 per piece and you know that you can only sell your product for $2.00. That is not enough margin to move forward. On the other hand, they may tell you that when you place an order for 500,000 pieces your cost goes down to .50. So, you could start small and take the small margin while you are proving the market and then know that you have the upside margin waiting for you when you hit it big.
- Find out what the terms of payment are. In some cases you may be able to put the order on hold until you have a PO (purchase order) from a customer. If the manufacturer is on deck and their lead times are o.k. with your customer, you could potentially take the PO to the manufacture and ask them to make it and wait until you get paid to pay them. This is another creative financing technique and could make the difference on which manufacturer you select. It may be worth going with a more expensive factory, for example, if they will give you terms that work better for you.
Have you got a creative manufacturing story you would like to share? Tell me about it!
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