Produce here, there, where?
I've had SO many conversations around planning for production in the last year; I thought it would be a terrific time to recap some of the various options, costs & repercussions.
Firstly, in developing your product, one could work with someone like me, who helps develop the idea, and look at market placement, make samples, costs & research specialized materials & help you make producible products. All that helps us determine what kind of materials & costs for that magic price point.
These first samples & prototypes are great, as you can "see " if it is really what you envisioned, as getting the materials for the mock-ups, making patterns & working out " how to produce it " along the way.
First samples are as perfect as can be. Still, they often need to be tweaked for production, and we do that with production samples that the factory makes ( we need to use their machinery, their cutting tables, the actual materials for production and the actual trims. )
The factory can then also work out the best production costs based on perhaps a scale of units. I often like to ask for 500 units. 1000, 2500, 5000 etc., depending on the product category.
Typically factories will not charge for the production samples & one can ( which I often suggest ) write a PO that is contingent on the production samples being approved for production. That way, the factory is more motivated to make it right, as they have a clear goal & can cost it as well as possible. And you can cancel the PO is the samples are not approved.
I prefer to work with my trusted relationships, which will have a profit margin on the cost ( no one works for nothing ), and it also holds their feet to the fire to properly manage the production. I like it because it is quantifiable. It's a line item that is known, not variable.
There are some variables & additional costs like:
- Specialized QA
- 3rd party Testing
- Customs & Duties
Production & Engineering companies often want to redo the prototypes and go to the factories to get net costs ( no extra profit margins ). However, you'll have to pay for their services & prototype re-dos.
Many of my clients are looking for domestic, which is good but can come at a cost. When I had my large company, we balanced domestic to test & fill in and worked on the mixed margins with the offshore production.
On-demand production is terrific as you don't have to carry inventory, but it restricts you to work creatively within their offerings. It all depends on your brand & what you are creating.
Some clients are doing really well using a combination of original design and one demand to create terrific on-brand collections.
It's your choice, comfort level and preferred way of managing your business.
I'll follow up with more blogs like this to walk through the many options that will come up for prototypes and production to help you make the right choices for you.
After all, knowledge is power, and the entrepreneurial journey is better together.
Cheers & Happy Sunday,