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Private Labeling vs Contract Manufacturing: What’s Your Best Option?

Private Labeling vs Contract Manufacturing: What’s Your Best Option?

There is a difference between private labeling an existing product and contract manufacturing one according to your own specs.

There seems to be some confusion about the differences between them. In a nutshell, private labeling is taking a product that already exists and having your own label put on it with little to no changes to the product itself.

Contract manufacturing is when you are ordering a product to be made according to your own specifications.

The one thing in common between the two is that you are not producing the product yourself which can save a lot of money and time.

Which method is better? Let’s take a closer look.

Advantages of private labeling

To get an idea of how these two methods of product creation match up let’s look at the pros when it comes to private labeling.

  • Lower costs – Since these products are already being made, there is no extra cost since you are not asking them to change the way the product is made.
  • Better marketing control – You may notice that the competition has failed in their marketing and your labels and logo better represent the product.
  • Small business friendly – Without needing to get bogged down in the logistics of manufacturing a product, you can focus on the other aspects of growing your business.

Private label is simpler than contract manufacturing but you do still need some tips on private labeling before you get started.

Advantages of contract manufacturing

  • Better cash flow – When you don’t have to make your own product you don’t have to tie up money in the production. Only order as much as you need for just in time production.
  • More quality control – Compared to private labeling where you have no control over specific features, you can have a product made exactly how you need it done.
  • Run your business – Unless you have a lot of experience in manufacturing then your talents should be put to use in running and growing your business while somebody else does the production.

It would cost way too much money to start your own production so it is better to go with a logistics company. Altemir Consulting specializes in manufacturing so this company or one like it is fundamental when contracting out your production.

Which is better?

As you can see there are advantages to both methods. The edge goes to contract manufacturing, however, since you can have a voice in how the product is made. This makes it easy to fill a gap in the market with a specific product.

Solving a problem a consumer has is the best way to make money. Finding a better way to make a product that solves your market’s problems better makes making money easier. And all without needing to make the product yourself.

It is all about control so go with the method that puts more control in your hands which in this case is contract manufacturing.

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by Rebecca Jones // Contributor to Businessing Magazine.

Opinions expressed by contributors are their own.