If you’re a first-time cosmetics creator, it’s possible you will launch your beauty brand on a small scale and build it in incremental steps. There are many reasons why it makes sense to create your first cosmetics product in small batches – here are just a few:

• It minimizes your financial investment/risk.
• It allows you to test your product in the market.
• If you’re doing the formulation by hand, it keeps the process manageable.

But there are a few things to know about creating products in small batches, including what it means to work with MOQs in cosmetics packaging.

What are Minimum Order Quantities (MOQs)?

MOQ stands for “minimum order quantities.” The MOQ is a number set by manufacturers (or other suppliers) that permits their products – whether ingredients or packaging – to be sold only in quantities of a set amount or larger. For example, a company that produces shampoo bottles may require a shampoo producer to order bottles in very large quantities – say 500,000 bottles at a time. A large-scale factory producing shampoo can utilize 500,000 bottles in no time. A small, independent creator formulating and bottling shampoo in her garage workshop may need months to use up that bottle inventory.

The industrial shampoo producer can order bottles in high volume and save on per-bottle costs the more bottles he buys. A small producer may only be ready to market 5,000 bottles of shampoo. If constrained to order 500,000 bottles, the shampoo creator is faced with a large financial outlay for a product that doesn’t yet have an established market. And they have to find a place to store all those empty bottles!

MOQs are part of the reason that a retailer like Target can sell its own shampoo cheaper than its smaller competitors. The contents of the two bottles of shampoo may be similar or even the same, but because Target has the buying power to negotiate a price on a high volume of ingredients and millions of shampoo bottles, it can save money on the production side and transfer those savings to consumers.

Small Producers and Packaging MOQs

The small cosmetics creator isn’t in a position to order in the same mass quantities as giant brands and retailers. That means that ingredients, packaging, and other components cost more, and that cost is either transferred to consumers or takes a bite out of profits – which may already be modest for a start-up brand.

Packaging is already a spreadsheet entry that small producers tend to underestimate when calculating their COG, or cost of goods. Yet packaging, and all that it entails, can add a lot to a product’s COG. Here are just some of the ways:

• The container in which the actual product is housed. Think glass and plastic bottles, mascara tubes, foam dispensers or eye makeup compacts. Depending on quantities ordered, these can cost pennies per SKU (stock-keeping unit, or individual unit for sale), or as much as $1.
• The packaging the container goes in. If it’s sold in a carton, there’s probably also an inner sleeve of pressed cardboard, and possibly a clear or colored cellophane wrapper. Or maybe it needs to be tamper-proof and sold in a blister-pack. Depending on the size, amount, and quality of the packaging materials, these can add $1 or more to each per-item COG.
• The design of your packaging. You need to pay a graphic designer to create a brand logo, and design and format every printed word and image on your product packaging. This service can cost relatively little, from hundreds, or lots, even up to to a few thousand dollars.
• Printing labels or packaging. The container supplier may or may not provide printing services but in either case, it’s an extra packaging cost.
• Package assembly. Unless you’re going to assemble your products on your kitchen table, you’ll need to pay someone to fold those cardboard boxes, insert the bottles and seal the carton.

So, with all that in mind, creators are faced with a dilemma: keep their COGs low, but still buy packaging in quantities that correspond to the amount of product they’re producing. For most small, independent brands, that means sticking to the smallest possible MOQs and finding ways to save on packaging.

How to Keep Packaging MOQs Low

There are two approaches you can take to keep packaging MOQ costs at bay:

• Find suppliers who are accustomed to working with small producers and willing to sell packaging at lower MOQs. Goldn can help with this!
• Buy larger quantities of packaging, but get creative with how you use it.

Since that second option is the riskier one, here are some examples of how to make your packaging work harder for you:

• Uniform sizes and containers. Package your entire line in the same-sized bottle. This way you can buy more bottles of one size, satisfy the supplier's MOQ requirements, and pay less per SKU.
• Use labels to differentiate. With those same-sized bottles or containers, apply different labels that stand out from one another and differentiate the various products in your line.
• Shop around for printers. Once you’ve got your blank bottles and boxes in hand, look for a digital printing service that offers you an affordable rate for small batch printing. Or, if you’ve got the budget and tech skills, invest in a digital printer and do your own printing.

Play the Long Game

Creating a new cosmetics product is a slow, methodical process. Rushing through it leads to mistakes and exposes you, the creator, to risks, both financial and reputational. Since packaging says so much about your product and also represents such a significant piece of your COG, there’s no incentive to make a snap decision.

• Study your options. Consider how a container or packaging option can be flexible to meet the needs of your brand as it grows.
• Shop around. Get packaging quotes from three or more suppliers and don’t be afraid to ask for price-matching.
• Be willing to adjust and negotiate. Maybe a supplier wants an MOQ of 10,000 bottles. But will they settle for 5,000, or even 7,500?
• Listen to your supplier partners. But also listen to your instincts and pick the packaging that’s right for you.

Are you already imagining the package designs for your new cosmetic products? Read about the 5 fundamentals of cosmetic package design.