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EXECUTION What to ask a manufacturer before placing an order?

BellaPippin

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Hey guys it's me *again*

I'm going to have a detailed call with a manufacturer rep today, from the ones I've been looking into. They seem to be able to do a couple different designs of the product I'm trying to put together (it's an enhanced existing product that fixes some pain points and adds value, I'm planning to brand it) From the few manufacturers I've contacted by email they are the only ones that will produce an order as small as 50 so I can validate the idea (and supposedly they can scale later as needed as they have bigger facilities)

I'm planning to ask if they are able to produce a sample before placing the first order of 50.

He asked me if I had a target price because below $1.00 they would have to take it offshore and need much more detail regarding the design to make sure it gets done alright. I said I was shooting for under $5.00 (my idea of the retail price is somewhere between $15-20 depending on a few things), now I'm hoping he won't quote me 4.99. lol

I already know the turn around time (he said 3-4 weeks from design approved to delivery I believe).

So now I'm gonna have a call with him and I'm hoping to get at least a sample be produced,

Is there anything you guys think I should know, or ask from them, or be aware of? Luckily this place is in Chicago so I can personally go to take a look at the materials or anything if needed. I'm just not sure what to expect from all this or how to go about it, I don't wanna sound like the total newb I am and be taken advantage of.
 

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OldFaithful

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Congratulations. Now things really start to get fun.

In my slowlane career, I've done the following when meeting with potential suppliers:

1) Always ask what their core competency might be. Just because they can make a widget, doesn't mean they will be the most efficient at it. You'll find your best pricing and happiest suppliers when you hit their sweet spot. Just because they already make a widget, doesn't necessarily mean they are good at it either.
2) You are correct to ask about their capacity to prototype, or produce small quantities with a subcontractor. If they can't provide small quantities, then you've got to find another supplier just for prototyping. Not fun.
3) Be wary of the "target pricing" question. Your hunch may be correct, their quote will probably come in at around $4.50 to $4.99. I prefer to avoid the question all together, but if I can't, then understate the target price by 1/3 or so . That leaves them room to negotiate without hitting your ceiling. (It is valid though to use your quantities as a factor in the design process. Designing for 1,000 pieces per year is quite different than 1,000,000 pieces.) The "target pricing" question is usually used to determine if they want to take on the project. They do the quick math: your 3 year total quantity is say...2,500 units at $5 per unit...and to them the project has a potential gross value of $12,500.
4) Ask to meet with the designer or engineer that will be working on your product. This will be a useful contact and it will be helpful for you to be on good terms with this individual. Ask for their direct extension/email, and provide yours in return. They will likely have questions for you.
5) Ask to see the shop floor and equipment that will be used to make your product. They will usually give you the nickel tour, but ask specifically how they would build it and what equipment will be used. That can tell you a lot about their competency and the quality you can expect. (Automation vs manual assembly, etc.)
6) Depending upon the product, you might want to ask about their quality procedures, or at least meet the person responsible for quality control.
7) Figure out who the decision makers as quickly as possible and try to get to know them. They are much more likely to work with you if they like you, even if your project isn't the most lucrative.
8) Ask if they use temps, or if they are real employees. Also ask how long the employees have been with the company. If there is a high turnover rate, it can tell you something, and it could be a red flag. Ask why.

This list is neither exhaustive nor always applicable, but it's a summary of my experience. I hope it help. Best wishes.
 

Walter Hay

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It looks like I am too late, but I agree with @[URL='https://www.thefastlaneforum.com/community/members/oldfaithful.38623/']OldFaithful 's point #3. In fact I have never answered that question any way except to say "I don't like horse trading, I just want the best price you can give me and still make a reasonable profit."

I have used the same procedure with Asian suppliers, but instead of "horse trading" I say "bargaining."

Walter[/URL]
 

Phil Dawber

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I can't really give you advice however I'd love to ask a question if that's okay.

(I'm asking this because I have an idea that will need a manufacturing company to create it - however it's something I've not looked into at all as I'm working on a different business at present)

Is it as simple as just looking for companies that provide this service online, do you need previous experience or is it as simple as sending an email and giving them the designs you want creating?

Do they store the products they create and distribute them on your request or is that a separate company you had to look into?

Again, I'm asking these basic questions out of interest at present for when it's my time to go down this route.

Hope everything works out great for you

Phil
 

Vigilante

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Hey guys it's me *again*

I'm going to have a detailed call with a manufacturer rep today, from the ones I've been looking into. They seem to be able to do a couple different designs of the product I'm trying to put together (it's an enhanced existing product that fixes some pain points and adds value, I'm planning to brand it) From the few manufacturers I've contacted by email they are the only ones that will produce an order as small as 50 so I can validate the idea (and supposedly they can scale later as needed as they have bigger facilities)

I'm planning to ask if they are able to produce a sample before placing the first order of 50.

He asked me if I had a target price because below $1.00 they would have to take it offshore and need much more detail regarding the design to make sure it gets done alright. I said I was shooting for under $5.00 (my idea of the retail price is somewhere between $15-20 depending on a few things), now I'm hoping he won't quote me 4.99. lol

I already know the turn around time (he said 3-4 weeks from design approved to delivery I believe).

So now I'm gonna have a call with him and I'm hoping to get at least a sample be produced,

Is there anything you guys think I should know, or ask from them, or be aware of? Luckily this place is in Chicago so I can personally go to take a look at the materials or anything if needed. I'm just not sure what to expect from all this or how to go about it, I don't wanna sound like the total newb I am and be taken advantage of.
Get yourself to the inside. There's an 57+ page thread in there you need to read.
 

TCMD

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Aug 8, 2016
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I can't really give you advice however I'd love to ask a question if that's okay.

(I'm asking this because I have an idea that will need a manufacturing company to create it - however it's something I've not looked into at all as I'm working on a different business at present)

Is it as simple as just looking for companies that provide this service online, do you need previous experience or is it as simple as sending an email and giving them the designs you want creating?

Do they store the products they create and distribute them on your request or is that a separate company you had to look into?

Again, I'm asking these basic questions out of interest at present for when it's my time to go down this route.

Hope everything works out great for you

Phil
1. there are a lot of different types of manufactures out there.. it is product and volume specific. You have choices from Job Shops to heavy industry and everything you can and cant imagine in between. I would also try to work with some one local at first if you can..

2. Some companies will stock and release products for their customers with a blanket order.. but usually for proven customers only..(I do but I have also been burned due to bankruptcies) but it does not hurt to ask..
 

TCMD

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Aug 8, 2016
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1. there are a lot of different types of manufactures out there.. it is product and volume specific. You have choices from Job Shops to heavy industry and everything you can and cant imagine in between. I would also try to work with some one local at first if you can..

2. Some companies will stock and release products for their customers with a blanket order.. but usually for proven customers only..(I do but I have also been burned due to bankruptcies) but it does not hurt to ask..
 

1step

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I agree about never answering the "what's your target price question" some good examples above as to how to answer that.
What I usually do is say something about how I am just looking for the best price for xx units as well as xxx units and xxxx units. This gives them the idea that, yeah your initial order is small for now, but you've got big plans for the future. I also find it helpful to see the range of prices to see how volume effects the pricing.
 

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BellaPippin

BellaPippin

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Thanks everyone, I feel I can prepare much better for it now! You guys rock :)


Envoyé de mon iPhone en utilisant Tapatalk
 
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BellaPippin

BellaPippin

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Well, this was the answer of the local manufacturer I contacted (on top of dozens of ones on Alibaba I'm messaging):

"Before we quote, I need to know a price point that you are looking for. This is very detailed and has a lot of sewing/handling. I do not want to quote if you are looking for a $2.00-$3.00 product"


The detailed thing is not true ...But besides that, am I understanding right? He wants me to name my price? What? What does he mean he doesn't want to quote me if I'm looking for that range? Am I missing something?

Maybe I misinterpreted him?
 

OldFaithful

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"Before we quote, I need to know a price point that you are looking for. This is very detailed and has a lot of sewing/handling. I do not want to quote if you are looking for a $2.00-$3.00 product"
That's the game, exactly. Your understanding is correct. They are trying to size up the potential profit on this project. I'd use the response of @Walter Hay
"I don't like horse trading, I just want the best price you can give me and still make a reasonable profit."
This supplier may not be a good fit, or they may just be playing the game, but don't fall into this trap.
 
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BellaPippin

BellaPippin

Enough snacking on mediocrity.
Read Millionaire Fastlane
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That's the game, exactly. Your understanding is correct. They are trying to size up the potential profit on this project. I'd use the response of @Walter Hay

This supplier may not be a good fit, or they may just be playing the game, but don't fall into this trap.
Thank you, glad to see my reading comprehension skills weren't that far off!!
 

Walter Hay

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That's the game, exactly. Your understanding is correct. They are trying to size up the potential profit on this project. I'd use the response of @Walter Hay

This supplier may not be a good fit, or they may just be playing the game, but don't fall into this trap.
I think you have hit the nail on the head. That answer from Bella's potential supplier is so off-hand that it doesn't give confidence that they will be good to deal with.

Walter
 

Patrick R

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Bella,

I am in the same stage as you right now and the best piece of advice I have gotten from @WalterHay @Scot and the many threads is that if you start for a second to feel uncomfortable don't hesitate to immediately find another manufacturer.

You don't owe them anything yet and there are more out there. No one is your only option. I wanted nothing more than to have my product made in America. Come to find out the only company in the US that would make it wanted to charge an obscene rate.

From there I found a manufacturer overseas that crafted at a similar quality, without the Made in USA tag, for nearly 400% less.

Some parts of business are about comprises; no comprimise is worth hurting your business over.

Sent from my SM-G930V using Tapatalk
 
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BellaPippin

BellaPippin

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Little update... finally ordered two samples from two different manufacturers who will accept a 50 pc first trial order later on, paid PayPal, and thru my Amex as well, just in case... while they arrive I'm gonna get the logo ready in a nice little tag or something and keep browsing for other things to import.

My product could have a second element that could be assembled into a final product (although the first part alone can be a product in itself) I wonder if there's a chance it would sell more with the second element included. Not sure how to go about that other than source the second element and then put it together on my own. Maybe the fully assembled product can just be another way of buying (meaning, sell both variants).

I hope the samples look good, I feel as if I could hear my patience making the sound of a fabric ripping under too much pulling o_o


I also got to experience the first email auto-responder from the chinese holidays. Tee-hee
 

4x4ord

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Little update... finally ordered two samples from two different manufacturers who will accept a 50 pc first trial order later on, paid PayPal, and thru my Amex as well, just in case... while they arrive I'm gonna get the logo ready in a nice little tag or something and keep browsing for other things to import.

My product could have a second element that could be assembled into a final product (although the first part alone can be a product in itself) I wonder if there's a chance it would sell more with the second element included. Not sure how to go about that other than source the second element and then put it together on my own. Maybe the fully assembled product can just be another way of buying (meaning, sell both variants).

I hope the samples look good, I feel as if I could hear my patience making the sound of a fabric ripping under too much pulling o_o


I also got to experience the first email auto-responder from the chinese holidays. Tee-hee
Congrat's on getting your samples on the way. That's a huge step!

As far as selling a combo, take a good look at your profit margins for the combo. I have a product that comes to me in bulk (25 pack) and I break these down in to single packs and 2 packs before I ship to Amazon. I find that, even though the sales rate is about the same, my margin on the 2 packs is about 5-10% higher than the single packs.

Just for giggles I broke down the math of doing the hand packaging myself. I can process about 100 2 packs in 8 hours. So, that equates to 2 long evenings. For this product after all costs are added in, my gross profit margin is 35%. My selling price is $59.99. At 35% margin, gross profit is $20.99 per sale. So, for 100 sales, I will make $2099 in profit. Divided over the 8 hours of work, that is making $262.37 per hour.

I'd recommend launching the stand alone product, then figure out your packaging plan for the combo and launch it as a second product with it's own UPC. Then you can compare the sales/margin and see if making the combo pack is worth your time.

I'm hoping you're happy with your samples when they show up! It's crazy exciting when they show up on your door step! One other piece of advice, once you get them up for sale, don't get too impatient. It's easy to say but hard to do. It takes time for product sales to get rolling.
 
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BellaPippin

BellaPippin

Enough snacking on mediocrity.
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Congrat's on getting your samples on the way. That's a huge step!

As far as selling a combo, take a good look at your profit margins for the combo. I have a product that comes to me in bulk (25 pack) and I break these down in to single packs and 2 packs before I ship to Amazon. I find that, even though the sales rate is about the same, my margin on the 2 packs is about 5-10% higher than the single packs.

Just for giggles I broke down the math of doing the hand packaging myself. I can process about 100 2 packs in 8 hours. So, that equates to 2 long evenings. For this product after all costs are added in, my gross profit margin is 35%. My selling price is $59.99. At 35% margin, gross profit is $20.99 per sale. So, for 100 sales, I will make $2099 in profit. Divided over the 8 hours of work, that is making $262.37 per hour.

I'd recommend launching the stand alone product, then figure out your packaging plan for the combo and launch it as a second product with it's own UPC. Then you can compare the sales/margin and see if making the combo pack is worth your time.

I'm hoping you're happy with your samples when they show up! It's crazy exciting when they show up on your door step! One other piece of advice, once you get them up for sale, don't get too impatient. It's easy to say but hard to do. It takes time for product sales to get rolling.
Thanks a lot for the useful advice! That's a great point I hadn't even considered, I'll look into that once I get the first one rolling. And yeah, it's so hard to not feel impatient. I'll try to remember it.
 

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Jon L

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Here's that pricing question from the supplier's side, albeit in a different industry (software).

I ask budget on a software project for a few reasons:

1) Are they a serious buyer?
2) What quality level are they looking for? (I can produce software for $5,000 and for $50,000 that does the same basic thing. The $50,000 option, though, is going to be much more fully tested, able to handle higher volume, have much better security, be more user-friendly, have many more time-saving features, etc etc etc. (One of my customers has 100 people using my custom application. Its very worth it for them to spend a lot of money to have me spit-shine their software. Each 10 minutes saved per day per employee adds up to a lot of money saved. Another client has 5 people, and therefore we've produced a much less streamlined application for them. They don't need it.)
3) Are they looking for bargain-basement suppliers? (If they are, they're not my type of client. I want long-term relationships with my customers. Bargain shoppers won't be around for long).

So....answer those types of questions without talking about price, and you'll start off on the right foot with your supplier.

"I have an investment account I'm going to use to fund this. I'm looking for a good price on a quality product. It needs to impress this type of person, and it needs these kinds of features..."
 
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BellaPippin

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Got my sample and I'm very happy with the quality!!! Not only that, but I am also very happy with the promptness of the manufacturer - Once I paid for it they put it together on the same day, shipped it the next, and I had it in my doorstep within less than a week. If they handle all orders like that, it could be a very good partner to do business with.

That said, I'm starting to have doubts about offering the first product alone vs offering the "combo" product. Reason being, the self-standing product has more competition/vendors/designs than the "combo" product, which ends up being more specialized/niche. The "combo" product only has 3-4 vendors on Amazon and none of them are very strongly branded.

What do you think? I'm so eager to start I'm thinking of still doing the solo product for now it's just that I'm guessing the sales wouldn't be as strong. I could be wrong!
 

Jon L

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Got my sample and I'm very happy with the quality!!! Not only that, but I am also very happy with the promptness of the manufacturer - Once I paid for it they put it together on the same day, shipped it the next, and I had it in my doorstep within less than a week. If they handle all orders like that, it could be a very good partner to do business with.

That said, I'm starting to have doubts about offering the first product alone vs offering the "combo" product. Reason being, the self-standing product has more competition/vendors/designs than the "combo" product, which ends up being more specialized/niche. The "combo" product only has 3-4 vendors on Amazon and none of them are very strongly branded.

What do you think? I'm so eager to start I'm thinking of still doing the solo product for now it's just that I'm guessing the sales wouldn't be as strong. I could be wrong!

My first thought on this was, 'I have no idea...I'm not in this industry, and have no clue.'

Came back to it though. I think this is only a question you can answer. If you google, you'd find thousands of companies that are successful with both options. Proctor and Gamble hits it out of the park nearly every time in insanely competitive commodity markets. Why? mainly because they have built up a process around it. Other, much smaller companies are similar. Other companies take a different tack. They specialize, and are quite successful in their own right.

I always think about a friend of mine that is well on his way to becoming a millionaire. Selling dirt. and rocks. to landscapers.

so...what kind of company do you want?
 

OldFaithful

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What do you think? I'm so eager to start I'm thinking of still doing the solo product for now it's just that I'm guessing the sales wouldn't be as strong. I could be wrong!
What's the downside of selling the solo product? Low sales volume? That's still better than waiting and having no sales volume. I have not sold on AZ, so admittedly, I'm not very knowledgeable about any other downsides or costs there.

I doubt it would hurt your brand to have the solo product out there while you develop the companion product. Conclusion: Go for it!
 
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BellaPippin

BellaPippin

Enough snacking on mediocrity.
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My first 50 units are here from China after a small hiccup with the ETA.

My personal life is a mess right now, but I guess at least I can focus on trying to finally make some money now.

I have the logo so I need a quick tag to put in the packaging and quickly find some wholesale product to put inside to test a few units. Finally I'm planning to give away a few to influencers online. I'm thinking:

Give away 10 or 15 units - then sell 50% 50% of the remainder the product only and as a kit and see if any sells more than the other. TBH I just want something to sell. Sigh.

Happy thanksgiving everyone. It's been a rough year for me and I don't say that lightly every year like
some... I'm ready for 2016 to end. If I can sell one product before the year ends I guess not all is lost...haha.




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