Congratulations you have made it through the research & design phase and are ready to begin producing your invention! So now what? Where do I find a factory? What are the costs? What do I need in order to sell my product?
Bringing an invention from finalized concept into mass productions isn’t as complicated as it may seem but having a good understanding of the vocabulary and what to look for play a key role in determining your potential for success. First let’s make sure you are ready.
If you can answer yes to these questions you should be ready to get started on the quoting process for manufacturing.
Finding the Right Factory
The best place to start for identifying factories in the US is thomasnet.com. On this website you are able to search by manufacturing process to help narrow your focus for quoting. If you are looking to go outside of the US into Asia, your best bet is to use AliBaBa.com. The process for locating a factory here is a little different and requires you to look for similar products rather than by manufacturing processes. By identifying factories that make similar products you should be able to find a factory capable of producing your product.
When selecting a factory quoting you want to ensure that they have quality standards in place, follow environmental regulations and have a good track record. Ask the factories to provide their quality certificates and environmental certifications. You can also check their status as a reputable company by looking for their D&B report. If they do not have or are unwilling to provide this information you don’t want to work with them.
Preparing a Quote
Shopping for a factory to produce your invention is not the same as going out to buy a DVD. Yes, if you shop around you might be able to save a few dollars on that DVD but the reality is that most stores will have the DVD for the same cost with maybe a few dollars difference. Factory quotes however can vary greatly, many times $1000’s or even $10,000’s difference between one factory and another. The more quotes you can gather the better you will be in the long run.
I have broken out some vocabulary that will be important when seeking and reviewing quotes:
- Tooling Cost – Upfront money required to create the plastic injection forms or tools necessary to mass produce the unit.
- Tool Lifespan – how many units can be produced before having to remake the tool
- Tool Material – determines the life of the tool. Hardened Steel is the best
- Cavities – Refers to the number of parts that can be produced at once.
- MC – Monthly Capacity – Refers to the number of units that can be produced in the span of one month
- Lead Time – Amount of time it takes for the factory to switch from producing another product to producing yours. This is based on their production schedules.
- MOQ – Minimum Order Quantity – The lowest number of product you can order from the factory at any given time. This number is determined by the factory and typically is based on their setup costs.
- Unit Cost – Cost for the manufacturing, assembly and packaging of the unit. This cost may be composed of the following aspects:
- Part Cost – cost of material and time required to make an individual part
- Packaging Cost – cost for materials and preparation of packaging
- Labor Cost – cost of a factory worker to perform manufacturing actions
- Overhead Cost – cost the factory incurs for producing your product.
- FOB – Freight On Board – describes where the product will be placed for pickup.
I would suggest preparing a form for them to fill out regarding these terms and costs (Example Here). This will help you to better compare one quote to another. It also helps them to answer all the necessary questions for your production needs.
Now that you have solicited and received some quotes how do you decide which factory will produce your invention? I would review quotes in this order:
- Reputation & Certifications – Ones who have a proven track record and are reliable are worth the investment.
- Unit Cost – Which companies had the lowest unit price?
- Tooling Cost – Which companies had the lowest tooling cost?
- Timelines – Who was able to tool up quicker or had short lead times?
If you are finding that the reputable companies are far more expensive than the others see if they are willing to negotiate on the price. There are no set costs for manufacturing a product and there is always room to haggle on the price. Start first by working on the unit price rather than the tooling. The tooling costs are upfront and a onetime charge, where as the unit cost is something you will pay for every product.
Other items to look out for are payment terms, payment methods and how they handle product returns or defects.
Time to Hurry Up & Wait
So you are confident that the factory meets all your requirements and have determined that they will be producing your invention. Things get very exciting at this point and you can almost feel your product but be prepared to wait months for that to happen.
Tooling development usually takes around 6-8 weeks, then there are the first production samples for you to review (another 3-4 weeks typically). Chances are they will not be perfect and they will have to make more revisions (another 3-4 weeks typically). This process may go on a few more times depending on the level of changes required. Once you finally sign off on the product you are ready to make that first order (add another 2-4 weeks).
Typical manufacturing timelines are 4-6 months from quote approval to first order completed. Having that first order completed doesn’t mean you are ready to sell just yet. The product has to get from the factory to your warehouse or to the retailer. In the next article I will go over what to expect and look for in the logistics portion of your development.