QTY 5000, Make Some Money! Contract Manufacturing Part 2

Posted February 13th, 2018 by Bailey Jones

So you’re selling 5000+ of your product per year. Well done! Now you’re set up to make some money. Let’s look at your contract manufacturing options:

5000-50,000: Use a small to mid-scale contract manufacturer close to home or abroad. Use more efficient tooling (read: more expensive) to begin to take advantage of scale. Contract manufacturers in this volume category expect their customers to generate hundreds-of-thousands US dollars revenue per year for the factory.

50,000-250,000: Use mid-scale manufacturers in worldwide manufacturing centers. Leverage production tweaks to make the manufacturing process more efficient. Use full hardened steel tooling, multi-cavity molds and other tooling to bring down individual piece price. Contract manufacturers in this volume category expect their customers to generate millions of US dollars revenue per year for the factory.

250,000-1 million+: Use large-scale manufacturers in worldwide manufacturing centers. Request detailed quotes with individual part breakdown and negotiate terms and price for individual part procurement and manufacture. At these volumes, it pays to work for continual price reduction and to increase production efficiency. Take the initiative to negotiate lower prices as the production becomes more efficient, while also allowing your production partners to make a fair profit. Companies producing at these volumes will have departments dedicated to sustaining engineering, procurement, factory optimization, and contract negotiation. Manufacturers in this volume category expect their customers to generate tens-of-millions or more US dollars revenue per year for the factory. These contract manufacturers include such recognizable names as Foxconn and Flextronics.

Find this and more in the book, The $39 Mustache Comb: The Start-Up Guide To Manufacturing.

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