You’ve probably have heard of the term, “MOQ” whenever you are making a purchase for certain products or goods. The acronym, “MOQ” means Minimum Order Quantity, the minimum quantity required to be ordered to make a purchase.
When purchasing corporate gifts and promotional goods, many factors affect the MOQ, which greatly affect the final pricing. The law of economies of scale applies. The larger the order quantity, the lower the pricing. The high volume order will offset the high production costs. However there are times that you may not want to purchase high volume but your supplier insists that you have to place order at a higher MOQ.
Factors Affecting MOQ
To make a good bargain (yes, pushing the price down at the quantity you want), it’s important to understand the factors that affect MOQ. If you can place an order at an optimum MOQ, you will get the best bargain! Here are some tips to help you lower or increase the MOQ to achieve your goals.
#1 – Origin of Products
Most corporate gifts and promotional gifts sold in Singapore are procured from overseas, usually from China or Vietnam, while some products are sourced from the western countries. MOQ of manufacturers from China is typically high compared to those from Europe and America.
#2 – Type of Products
MOQ is often high for simple and affordable gifts such as pens, lanyards, towels, phone covers and etc. Minimum amount to be ordered is usually in the thousands, or at best in hundreds. If you were to order in the quantity of low hundreds, do expect that you will be purchasing at a steep pricing. The pricing would be similar to the price of simply purchasing 1 piece.
Products that are more premium such as leather products, metal products and goods with customised shapes and designs, have lower MOQ. These products are more complex and expensive to produce, and the suppliers are typically more keen to produce at a lower quantity. MOQ of a few hundreds would be more acceptable.
#3 – Customisation
With no surprise, products that require high level of customisation affects the amount of minimum order. Customised products require longer production lead time and higher production cost, which could lead to higher MOQ to offset the higher costs. For example, if wish to customise the shape, size and material of notebooks, the supplier would need time to prepare for the necessary materials and tools. More effort and tools required for the customisation naturally lead to higher expenses. Sometimes the costs are so high that it’s only logical to purchase at a higher amount to enjoy the benefits of economies of scale. Instead of buying 500 pieces of notebooks, you would want to purchase 2000 pieces to push down the unit cost of each notebook.
#4 – Mould Price
Customised products mentioned above would usually require settling up of new moulds. Moulds are one-time setups required to manufacture the products with customised shapes and designs. These mould prices could cost up to a few hundred dollars, which prompt you to consider about increasing the MOQ to spread out the cost.
#5 – Size of Suppliers
The natural instinct for buyers is to purchase from the most well known suppliers. Yes, you do get certain assurance and comfort that the quality of products would be decent because these suppliers are relatively credible. On the flip side, you have to consider that these popular suppliers are likely to be more expensive than the less well known peers. A larger supplier typically only accept large orders as they have huge overheads to cover which cause them to charge at higher prices. Smaller suppliers are usually more keen to work at lower quantity while still offering you competitive quality and pricing compared to the bigger suppliers.
#6 – Raw Materials and Parts
If you are requesting for raw materials or parts that are more costly or rare, the suppliers are likely to increase the minimum order quantity. For example, instead of selecting plastic material for your name card holders, you decided to choose real leathers. Real leathers are more costly and rare compared to plastic, and the suppliers would certainly bump up the MOQ as they would be purchasing real leather at a higher quantity too.
#7 – No Available Stocks
Most suppliers do not store pre-made products as they do not want to risk storing unwanted inventories which they could not sell off. Even if they do have pre-made products, they have limited designs and options for you to choose from. You can purchase at low quantity if you are comfortable with the existing designs. If you do not want the pre-made products, you would have to place mass order for your custom design. Anyways the beauty of corporate gifts is that it could be fully customised. What’s the point of buying gifts that you can’t customise much?
How to Lower MOQ while Enjoying Good Prices!
More often than not, you would be asked to place order at a fairly high volume, else you have to be prepared to pay a unreasonably high price. Follow these tips to enjoy good prices while lowering the MOQ.
#1 – Use Existing Materials and Products
If you are lucky, you can find existing pre-made products from suppliers that are up to your liking. The suppliers will allow you to make simple customisation such as imprinting your company logo on the product. Though you won’t be able to make much customisation, you would be able to purchase gifts with reasonable customisation, at a lower MOQ and most importantly at a comfortable price.
#2 – Work with Smaller Suppliers
Smaller suppliers are usually more willing to deal at lower MOQ than larger firms. As long as you do your due diligence, you would find credible and affordable suppliers that can offer you with competitive pricing and quality at low MOQ. For simple and common products such as pens, the suppliers might ask you to choose a specific design. If you are OK with this specific design, they will allow you to join their current production of that product which they are producing for other clients. Hence you can place an order at lower MOQ.
#3 – Sample Order
Typically suppliers would charge you for the samples that they offer you, especially the pre mass-production samples. Suppliers incurred costs to produce the samples and would require you to pay for the samples. Though you could always request to not pay for the samples, which the suppliers would often succumb to your request, you should consider paying for the samples. The simple act of paying for the samples display your sincerity to close the deal with them, and they would naturally be more open to negotiating for MOQ and prices.
#4 – Off Peak Season
Avoiding the holiday seasons at all costs! If you were to order during the holiday seasons such as Christmas or Chinese New Year, you would end up paying for unnecessary high prices. Always plan in advance! Avoid ordering during the peak seasons if you do not need the product during the period. For example, if you need to re-order the usual promotional pens for your company as the inventories have dried up, do not (accidentally) re-order it during the peak period. Or if you need to order gifts for the holiday season, you can always order it a few months in advance!
#5 – Trends
Trends come and go. When you jumped on a bandwagon, you would be expected to place orders with higher MOQ as everyone else is ordering it too! Suppliers would bump up MOQ for everyone.
#6 – Relationship
Building and maintaining good relationship with your supplier would probably be the best advice that you could have. The supplying firms are managed by humans after all 🙂 With a good relationship, MOQ, prices, and everything can be discussed towards your favour! 🙂
To enjoy the benefits of low cost corporate and promotion gifts, always order at a higher quantity. The general rule of thumb is that the higher the quantity, the lower the price. If you are planning to order 2 batches of 500 pieces of corporate and promotional gifts in the next 12 months, you should reconsider. Ordering 1 batch of 1000 pieces of corporate and promotional gifts is more cost-effective. Now that you understand MOQ, go on to get your best bargain!