Determining the most appropriate cost for your product is a very interesting subject in the manufacturing industry. When you start out factoring the cost of raw material, labor, packaging, quality control and shipping it often exceeds your anticipations, especially if you are working on domestic levels or have just started out and produce in small quantities.
One of the most common practices to reduce per-unit cost is increasing production volumes. This isn’t an option for most starter businesses, as you will need a considerable budget set aside to scale up. Let’s discuss an authentic practice to trim down your extra expenses without having to increase your quantities.
Its natural behavior to stick to your original product design, but the idea that you started with doesn’t necessarily mean it will be the best option for the long-term. Sometimes you choose a material without totally understanding the cost implications or opted for a design modification that you could not afford on a regular basis.
By making certain modifications, either by selecting different raw components or changing the manufacturing method of your product, or even by eliminating a few bells-and-whistles, you can effectively reduce the cost, which will widen your profit margins in the long run.
It’s a good idea to scout out options for production cost reduction and product modification from professionals who can guide you based on experience. For example, your supply partner or a distributor who serves others in your industry can often make informed suggestions on how to improve and reduce overhead.
As the web has become dominated by B2B resources, you can also check forums and industrial resources for advice from professionals who have solved similar problems in the past.
Take, for example, a wooden furniture and pre-built deck manufacturer named Gordon. He was struggling with his budget and desperately needed to reduce his production costs, but didn’t want to change his signature designs.
So he started with tweaking minor things such as changing fastening components and even experimenting with the application process of resins and other coatings. His goal was to reduce raw material usage but still maintain the quality, as that is a major selling point for his brand.
He searched out massive online sources for selecting the best possible solution. Eventually, he thought of changing his regular bolts and replaced his simple screws with domestic timber bolts from a supplier offering a more competitive price. The components also eliminated the need for washers, which reduced his costs even further.
He did not come up with this idea all at once, he had to go through various online resources where he could easily find different solutions, ranging from simple traditional screws to heavy-duty wooden fasteners. This extra bit of research better enabled him to make a good decision.
You can do such tweaking for any kind of business or whatever product or service you offer. The key is to consult multiple sources so you become familiar with all possible solutions, even those that are unexpected.
Once you know your options, selection and sourcing do not take much effort. The time you put in to evaluate your practices and costs can amount to real revenue, and that will give you the budget to explore even more options.