‘Minimum Order Requirements’ (MOQ’s) can be a stumbling block for many new buyers. If you are just starting off, chances are you want to play it safe by starting with a small “test run” before investing a larger sum.
Many US factories allow brands to produce in smaller quantities, knowing they want to scale slowly. In order to make the production order beneficial for both brand and factory, consider leading your negotiation conversations with one of these tactics.
1. Just Ask
The most obvious: ask for a lower minimum. You can always ask if they will go down.
2. Low Minimum at Higher Price
Ask if they are willing to go in at a lower minimum and pay a higher price (you don’t want to offer the price, let them come back to you). Ask them ‘if I’m willing to pay a higher price, will you lower the minimum and to what?’
3. Cover Set-up Fees and Costs
Once you “get” the supplier’s position, propose an offer for a lower order quantity that accommodates their set-up and costs. For example, it’s time consuming for a fabric supplier to do the prep work required to custom dye material, you could offer to pay a flat ‘dye fee’ in addition to the regular cost of the custom fabric. While this fee represents an added cost, your order total is still most likely less than if you were to order three times the amount of fabric.
4. Gradual Production Run
Consider giving the supplier a deposit for a larger order, but just producing small amounts at a time. However, this may mean that you will pay a higher price per piece for a quantity under the MOQ.
5. Group Your Order
Asking the supplier to group your order with another client who is buying a similar item. (This would most likely require you to be flexible with your schedule.)
If you try unsuccessfully to convince a supplier to lower their minimum order requirement, you might need to look for an alternate product or material. It might mean that you don’t get exactly what you wanted on the first order, but it will allow you to start a relationship with a given supplier, and grow your business to the point where you can afford to meet the MOQ.
[ctt tweet=”5 Ways for Entrepreneurs to Negotiate Minimums With a Manufacturer. http://mrow.co/1TrWxJ7 via @MakersRow” coverup=”0qcWg”]
Thanks to our personal sourcing specialist, Liz for contributing to this article.
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