The Ultimate Guide to Minimum Order Quantity (MOQ)

What does Minimum Order Quantity mean?

When you are looking for new things to market, you could run into the term MOQ. A number is typically used to convey this; examples include 10, 50, 100, 1,000, and so on.

For suppliers, the MOQ, or Minimum order quantity, is a crucial figure.

MOQ is the least quantity of a product a supplier will produce for a certain order. With this figure, a reasonable profit is ensured for the supplier.

Here's an example that's specific:

Your goal is to begin selling 500 T-Shirts under your own brand. You discover a T-shirt producer after looking through vendors. You can view the following information in their details: this means that you must consent to purchase at least 500 T-Shirts before the provider may produce your order. If you offer the supplier less than this sum, they won't cooperate with you.

If they produce fewer than 500 T-Shirts, they will lose money. So, the price is higher to avoid loss.

MOQ and Supply Chain

The information up top provides a fundamental explanation of what MOQ means. The MOQ is a little more complicated in the supply chain. What we mean is this. The majority of people think the MOQ just covers the production costs of the product. Production is only one aspect of the supply chain. The MOQ varies for each individual link in the supply chain.

Take the supply chain MOQ for your private label T-Shirts as an illustration:

Production - MOQ for costs associated with tooling, operating equipment, and raw supplies (different paint shades and different fabrics for design).

The MOQ for the profit margin of this link is for wholesale and distribution. Consider labor and storage.

Similar to manufacturing, in packaging, this MOQ applies to raw materials like paper, ink, and glue as well as machinery.

Shipping - Along with the MOQ of the airlines and shipping firms, this MOQ also covers document fees in the logistics link.

If there are fewer than 500 T-Shirts, the company will suffer a loss.

Calculating MOQ per Order

The MOQ is the Minimum order quantity that a supplier must produce to break even. Each takes into account the potential changes in fixed and variable costs for each product unit depending on the particular order quantity.

Freight, equipment setup and depreciation, labor, raw materials, energy, packaging, plant and warehouse rent, taxes, and other factors that may vary significantly by the manufacturer are just a few of the many factors to consider.

For accurate numbers, these calculations need sophisticated algebra and calculus. Manufacturers typically round to the nearest full integer using empirical methods.

There is no formula that a buyer can use to determine the MOQ. You are unaware of the specific expenditures incurred by each producer. The Optimal Order Quantity (MOO) that you may have seen mentioned on other websites in relation to your order is actually that quantity.

OOQ and MOQ

The formula for determining the optimal order quantity helps buyers acquire the most merchandise at the lowest possible price. The objective is straightforward: to order the exact quantity needed to satisfy client demand without carrying too much inventory. The manufacturer's cost-effective order quantity (MOQ) is determined. The cost of manufacturing each device will essentially increase for orders below this number.

A good rule of thumb is to balance your unique needs with those of the manufacturer by determining an optimal order quantity (MOQ) that both you and your preferred manufacturer will accept. The method used to calculate MOQ is affected by price variations across the supply chain, starting with raw materials. For complicated mathematical calculations or software used by manufacturers to determine MOQ.

MOQ on Alibaba: T-Shirts have a MOQ price structure that is visible if you search MOQ on Alibaba. The appearance will resemble this:

On Alibaba, you can find a MOQ price structure by searching for MOQ for T-Shirts. The appearance will be similar to this. As you can see, the price of the T-Shirts decreases as the quantity ordered increases.

3 Types of MOQ

It is crucial to remember that the MOQ is not a set sum. The MOQ is largely influenced by the unique order specifications of each customer.

The product requirement document is crucial when placing an order because of this.

We always source the greatest products, not always the cheapest, as DocShipper has repeatedly noted. A great illustration is a t-shirt. For labels like Louis Vuitton, we source from the same foundries.

Three different MOQs are available from the manufacturers, depending on the specific requirements.

Complex MOQ

You are an apparel designer who needs a complicated customized product with a specific fit, shoulder breadth, length, and/or collar shape.

Let's assume the MOQ is 300 pieces. By using design drawings, the clothesmaker will create samples. All sample charges will be deducted from a subsequent, larger order. For established designers or fashion brand firms, this choice is frequently reserved. The most effective illustration of a large or complex MOQ is the MOQ for garment makers. It is highly challenging to determine a MOQ pcs number for apparel due to a large number of variables.

The MOQ for garments is as follows:

• MOQ for fabric is 300 meters, or roughly 360 square yards, for each shirt color.
• MOQ for each item is 300 for each distinct color or size.
• MOQ in USD - total order of 2,000 shirts
• MOQ in units: 300 t-shirts that are packed

Low MOQ

Low MOQ refers to orders for fewer than 500 units of a product. These products frequently come in big parts with tiny orders. Take furniture as an illustration.

One of two methods can be used to calculate low MOQ formulas:

Product – the quantity required to meet the MOQ before beginning production, furniture manufacturers demand a specific quantity of units.

The order must be made in order to meet the MOQ, which for chemical manufacturers is a minimum of $50,000.00 worth of merchandise.

The MOQ for t-shirt orders is frequently smaller, at 100 units, and the customer may only need to minimally personalize the product (a logo or printed pattern).

This would make the ideal personalized option for a school uniform or attire for office workers. Customers can choose from a wide selection of t-shirts and polos in a range of designs, hues, sizes, and materials.  

No MOQ

T-shirt orders with no MOQ are frequently filled from the manufacturer's current inventory. Although there is a wide range to choose from, the inventory on hand lacks branding.

A single t-shirt can be ordered, and the manufacturer will send the shirt via express delivery to any location in China.

You can produce personalized t-shirts of the same quality as well-known brands if you run a Print on Demand company and work with a top-notch drop-ship company.

Negotiating MOQ

Chinese companies frequently negotiate; it is an essential component of all business dealings. You can bargain for a reduced MOQ even if you're a brand-new customer.

All you need to know is how. There are several ways that one can acquire the knowledge, including:

1. Be open and truthful with the provider - Be prepared to explain your unique position, sales expectations, and company ambitions. With the supplier, you want to foster confidence and possibly collaboration. The supplier is more than just a location to find goods. Your business partner is the supplier. The development strategy of the provider should be compatible with your strategy. If you do these steps, numerous suppliers will be much more likely to cooperate with you on the MOQ, pricing, and product order.
2. Put yourself in the supplier's position - Be prepared to collaborate with suppliers to identify strategies for lowering production costs per unit of a product while upholding product quality. Inquire about the production calendar. Do other clients place orders for the same goods as you do? In that case, it might be conceivable to merge two orders into a single production run. Even if a single order might fall short of the MOQ, combining it with other orders might enable it to do so.
3. Choose a less expensive but functionally equal raw material – These are available, but you must inquire. It is not the kind of knowledge that is easily conveyed.
4. Make an offer to cover more costs in exchange for a lower MOQ - There are a few choices. It never hurts to ask.
5. Choose current stock over the private label, since manufacturers frequently have excess inventory and want to make room for new products.
6. Price comparison between businesses - If you can show that a competitor is offering a lower price, a business will decrease its price.
7. Give the vendor some time - Explain your financial situation to the vendor and request a response within a few days. The outcomes could shock you.

Overdoing Negotiation

It is tempting to negotiate a lower price with the manufacturer to satisfy your wants, and if the manufacturer thinks you have a promise, it might happen.

Warning: Bear in mind that no manufacturer will incur a loss on a consumer as you bargain. They will ignore you entirely and send you out the door with the trash for the day if working with you requires taking a loss.

Additional unforeseen effects:

1. Products of poor quality - You risk losing product quality. With the decreased MOQ, the manufacturer is attempting to recover lost costs.
2. Value - Your manufacturer could not be as accommodating when it comes to refunds or other issues.
3. Lose good faith - Successful business relationships depend on strong communication. If you defraud your manufacturer, you risk being kicked out of the industry cluster. In the event that the last scenario occurs, you can be completely forced out of your industry.

Satisfying Supplier MOQ

As a new business owner, meeting the MOQ can seem challenging at first. 500 T-Shirts were ordered, and you now have to sell them all. You are capable of achieving this, so you must prepare and be willing to temporarily "tighten your belt". At first, your profits might not be as high as you'd want, but that's the price of conducting business. But then how to go on with the supplier? 

1. Be truthful about your inventory - How can you get your 500 T-Shirts sold? Are you able to run a marketing campaign?
2. Close deals - Customers enjoy a good offer. Even offers like "Buy one, get one half off" or "Buy two, get one free" frequently have good sales results.
3. Flash sales - Provide your customers with a last-minute deal akin to the one stated above.
4. Be inventive and inquire about mix-and-match products - Find out if the supplier has additional stock that they'll discount for you.
5. Modify your product line - Stop selling any 500 T-Shirts that do not sell.
6. Find a new source - DocShipper always searches for the best manufacturers. Contact us to discuss finding a different MOQ if you are having trouble meeting the existing one.

Failed Negotiations

A supplier could occasionally refuse to reduce their MOQ. Many of the more reputable vendors that DocShipper works with are unwilling to alter their MOQ.

As a startup company, this could place you in a difficult situation. One thing to keep in mind is that DocShipper won't press vendors too hard for a lower MOQ. Chinese vendors collaborate extensively with one another, even though they are in the same sector. Buyers that behave rudely and disrespectfully during negotiations will be promptly blacklisted.

Let us help You Succeed

When a corporation purchases items from China, MOQ is frequently included in the purchasing process. When sourcing products, DocShipper looks for the best suppliers—those that work with renowned companies throughout the world.

Send us your requests for extra information, connections to external products, or product recommendations. We'll be in touch with you shortly to get your new business off to a successful start!

The MOQ with the suppliers we work with may be higher, but the quality of the product and the satisfaction of the client more than makeup for the difference.