5 Things to Consider When Choosing a Manufacturer
First of all, congratulations are in order for taking your business and your brand to the next level of success. The fact that you’re in need of a manufacturer at this point for your cosmetics and beauty products means you’re growing. By now you’ve already searched the internet and your local publications for cosmetics manufacturers near you and came up with a few options. You’ve never worked with any of them nor have you any experience on this level of business.
Here are at least 5 questions you need to ask when choosing the right manufacturer for you:
1. Minimum order quantity (MOQ)
This is a case of quantity over quality. You need to know what is the lowest number of units your selected manufacturer will make, especially as a start-up entrepreneur. The last thing you need is to sit with more products than customers. This is also important to know for that last minute order that just came in with a deadline which brings in the next point.
2. Lead Times
This is a complete timeline of how long your manufacturer takes from the time they receive your order to the delivery of your product. Having this knowledge will help you set clearer goals.
3. Formula Ownership (non Disclosure agreements come into play in this step)
Some manufacturers will make your product based on your unique recipe without making any changes, whilst others have their own chemists and scientists who will take your recipe, tweak it and charge you additional fees for it. These fees can sometimes be hidden. It's at this point that you must make clear who owns the recipe. Some manufacturers do this to take ownership of your recipe, whilst others allow you to keep it. Other reasons include wanting to help cut your cost on production but be careful it doesn't alter the quality of your product.
4. Additional fees
Just because everything between you and your selected cosmetics manufacturer has been discussed and agreed upon, doesn’t mean it’s going to go according to plan. There are chances that some manufacturers will slip in additional fees throughout the manufacturing process like testing fees, stability fees and formulation fees, amongst others. Not all of these options have to be questionable, some are legit charges so read through and make sure if there are any fees you do not wish to be charged for, that it is clearly stated before manufacturing begins. Any additional fees will eventually affect your Cost of Goods Sold/ COGS (this is the price you the entrepreneur will pay your manufacturer. Any price difference above this will become your profit margin, so keep those costs as low as possible. Here at Cosmetics Lab, we offer full transparency throughout the process.
This is essentially important to your brand and reputation. Some
manufacturers are certified by either government bodies or other larger bodies to produce and distribute CERTAIN product categories. First of all make sure both your goals and their paperwork align as this can enhance the appeal of your product in the market, especially when it comes to International Shipping. Experience with these regulations is very important if you’re considering selling your products to customers out of the country, so having a manufacturer who understands the product limitations and paperwork is key.
Bonus tips for the new entrepreneur:
1. Too much too soon
Avoid releasing a wide range of beauty products too soon. The key is to release up to 3 products, allowing it to perform well, whilst building momentum in the market and your brand. Once you have a niche in the market, then you can consider adding more products, otherwise known as upselling.
This creates diversity and brings in more revenue. Releasing a few products at a time also allows your manufacturer to correct any possible errors in the manufacturing process which again can cost you if you have too many spoiled products.
2. The tempting discount
Some manufacturers will encourage you to lay a large order in the beginning and may even sweeten the deal with a discount you can’t refuse. As tempting as the deal may look, the better thing to do is avoid a huge order simply because your first order is a trial. You need to make sure the quality of your product is on par, if there are any flaws then it must be corrected for the next batch and also this is a good time to see if your chosen manufacturer can deliver your beauty products in the time frame they promised. Time does affect client satisfaction, a business's reputation and eventually sales.
3. Lastly, be wary of cost-cutting measures and proposed changes to your product by the manufacturer.
Most commonly some ingredients like preservatives or fragrances are often changed for cheaper options. Whilst there’s nothing wrong with this and in fact, it can reduce the cost to manufacture your product, make sure these changes do not compromise the quality and purpose of your product. The last thing you need is a product that was supposed to smell like lavender and now smells like soap. Make sure the manufacturer has conducted thorough tests before going into production with any proposed changes.
So what’s the number one key? The 3 C’S- Clear Constant Communication. It’s that simple if a chosen manufacturer is not meeting your requirements and is costing you not only money but your brands’ reputation, it is perfectly professional to change to another cosmetics manufacturer.
Luckily, Cosmetics Lab offers crystal clear communication. We will work with you through the whole process, with transparency. All our products are thoroughly tested and compliant with EU laws.