Beata Leyland
Business Owner & Author of this article
That’s why it’s so important to not cut costs since the very beginning but rather invest in good help who can help you cut corners smartly later.
Intrigued ?
There are so many small elements that create a total price yet all of them are imperfect to measure.
What is the true cost of manufacturing?
You can’t put a price tag on everything since the beginning and clearly not on collected know-how and people who help you achieve your goals.
To truly tackle this topic, I would like to come back to step zero: the business idea.
What do we want to sell, how do we want to sell it and who can help us with it?
If we want to manufacture a trendy snack, we need to understand that it might take a while to have your product on the market and the true costs of manufacturing will contain of course the sourcing agent,
samples,
raw materials,
choosing a manufacturing plant,
R&D,
manufacturing process,
but also plenty of know-how and modifications.
Plenty of modifications will be needed, such as with the formula, but first and foremost with the business mindset of the Founder.
Costs of manufacturing are countable when you think about tangible assets.
This same process has also plenty of intangible elements which drive the project forward or backwords.
Tangible Measures.
Raw materials and costs of labour are tangible.
Yes, you can approach it differently. If you don’t have time for searching and later choosing a manufacturer who can do all for you, it’s ok.
You need to find a Sourcing Agent to help you select a proper partner for you (like us), have a few videocalls, choose smartly, test samples and start full-scale production.
What can be tricky here is signing contracts and negotiating terms and conditions because many companies treat small batches as a potential risk therefore their price formula will be different or you will not own your formula in the first place.
Be careful what you sign as from one day to another your manufacturer can change terms and charge you way more!
That’s why it’s so important to not cut costs since the very beginning but rather invest in good help who can help you cut corners smartly later.
Your manufacturer will have their costs, maintenance, people, R&D, packaging etc.
What is important is to make sure you are aware of the way how they work, how you are billed and the final outcome which determines your being or not being on the market.
Some people chose to work with a manufacturer only on production, and have packaging, R&D, and warehousing with other entities.
It’s a smart saving of the costs; however, your expense will be time, at least at the beginning while choosing a few business partners not 1 or 2.
Costs of raw materials vary so make sure your factory doesn’t put on you even the smallest fluctuations, otherwise it will be impossible for you to read their invoices.
You don’t want to have monthly disputes over money.
Maintenance and labour costs as a service provider are easier to assess so here you shouldn’t expect major increases unless you have a global crisis (like with fuel in 2026).
Whatever happens, it’s important you ask for clarification and ask certain questions about fees before signing any long-term commitment.
Let’s don’t forget about a huge chunk of the budget which always goes to inventory management, warehousing and distribution.
Be careful with whom you sign a contract, how they work, and how transparent they are.
When your product is already on the market, the fun begins!
Marketing costs, website, ads and people or any tools which will help you to reach out to your audience.
These costs are not manufacturing costs, however you should have these in mind while calculating your retail price.
Building a brand, building interest, recognition, and outreach takes way longer and costs many times more than the manufacturing process.
Many Founders calculate their profit margin or costs of gaining revenues purely based on costs of manufacturing and then they struggle.
Not calculating costs / time which is impossible to assess at the beginning it’s a severe mistake!
ROI vs ROV (please see my article from 2025 about it)
What to do when we don’t know how fast our product will be sold and how many ads we will need to sell it?
The safe option for small brands is to assume adding the same chunk for advertisers as for production although I am sure doing it in proportion 1:1.5/2 would be even safer ( manufacturing costs=marketing costs).
Many companies don’t add marketing since the beginning to the retail price, but later on they catch up when brand/product gets more recognition.
Every book or article presents a formula for costs of manufacturing a bit differently and all of them are right in their own way as everything depends on your budget, product and your potential clients.
What is important is to choose the right people to help you achieve your goals.
Sometimes this means 1 person, sometimes 10 people.
You can’t put a price tag on people,
but you can on added value which they bring that’s why it’s important to choose smart people,
and smart solutions for you and for your business.
AI is not a solution for everyone.
Before implementing anything make sure you have a basic plan of action (if not, take a look at our article about a business plan!),
open mind and courage to choose right partners for you.
My take on this topic is to be open for different solutions and understanding your product and I am sure you will be fine.
If you need someone who can help you with introducing your own brand to the market, choose right partners …
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