How to Compare Manufacturing Quotes Side by Side

By Tyler · 8 min read · Cost, MOQ, Lead Time and Commercial Terms

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Do not compare the unit price.

The unit price on two quotes is almost never the same thing. One includes packaging, the other does not. One is quoted with tax, the other without. One is priced on 1,000 units, the other on 1,050.

Compare two things instead: your landed cost per sellable unit, and who is responsible for what.

Before you compare prices, decide what matters most

This is the part I most want to say to a new brand.

Price should be the last thing you look at.

The order should be this.

One: product quality and stability. If those do not hold up, a low price means nothing.

Two: whether the factory matches your order size. Bigger is not better.

• A small order should go to a smaller factory. They will take it, and they are more flexible.
• A large order should go to a larger factory, because they have the capacity to carry it.

A plant that runs a million units a year, taking your 500-unit order. How much attention do you think that gets?

Reliability comes first. Price comes last.

Why two quotes are not comparable

Three factories quote the same product at three different prices. Usually it is not because their costs differ that much. It is because the quotes are built on different assumptions.

1. The quotes include different things.

Is packaging in or out? Is filling in or out? Is tax included? What about the outer carton, the leaflet, the label application? Without that written down, you are looking at three numbers, not three quotes.

2. One-off costs are hidden.

Sampling, tooling (dies, injection moulds) and testing (stability, microbiological) are not in the unit price, but you pay for them. Some factories fold them into the unit price, others bill them separately. The factory that folds them in looks more expensive. It is being more honest.

3. The word “unit” means different things.

This is the one people miss. Same 1,000-unit order:

• Factory A delivers 1,000 units, allows 3% defects, so you can sell 970
• Factory B delivers 1,050 units, allows 3% defects, so you can sell 1,018

Once you divide by sellable units, the numbers can flip completely.

How to compare manufacturing quotes: a three-step method

Step 1: put both quotes in the same table

Fill in one row per field for each factory. When a cell is empty, ask.

#	Field	What to pin down
1	Unit price	Tax included? Packaging included? Filling included?
2	MOQ	Minimum order, can colours be mixed
3	Sampling fee	How much, can it be credited against the bulk order
4	Packaging	Who sources it, is it inside the unit price
5	Tooling / dies	Who pays, who owns them
6	Testing	Stability and microbiological, who pays
7	Filling / assembly	Charged separately or not
8	Packing labour	Charged separately or not
9	Lead time	How many days, and counted from when
10	Payment terms	Deposit percentage, balance trigger
11	Trade term	EXW, FOB or DDP, and who covers which leg
12	Defects	Standard, rework responsibility, who pays freight

One thing to settle before anything else: which price is it?

Chinese factories quote ex-works about 90% of the time. Unless you ask, they will not quote FOB, CIF or DDP.

So the first question on any quote is: is this ex-works, or delivered to my door?

Step 2: keep one-off costs separate

Do not spread one-off costs into the unit price when you compare.

• Sampling is paid once. Spread across a small order it makes the unit look terrible.
• Tooling is an asset. It does not change when your order doubles.
• Testing barely changes with volume.

Do it this way: unit price x quantity + one-off costs = total goods value. Compare totals first, then work back to a unit figure.

Step 3: divide by sellable units, not produced units

This is the number that matters:

Landed cost per sellable unit = (total goods value + freight + duty + fees) / sellable units

Two things to hold on to:

• The denominator is sellable units, after the defect allowance is taken off
• Freight and duty are charged per shipment, so small orders always lose. The same quote at 500 units and 5,000 units gives you two different numbers

Three places money hides

1. Sampling. Ask what it costs, how many revision rounds it covers, and whether it is credited back when you place the bulk order. Many factories will credit it. If you do not ask, you pay twice.

2. Packaging. Ask who sources it, whether it sits inside the unit price, and who carries the loss. In China, packaging is often bought by the factory on your behalf. Then the question is whether you settle at actual cost or at a fixed price inside the quote.

3. Testing. Ask who pays for stability and microbiological testing, and how many rounds. Some factories include it. Some bill it separately, and the cheaper quote stops looking cheaper once testing is added.

When the more expensive quote is actually cheaper

1. The expensive one includes packaging and filling, the cheap one does not. Add the missing pieces back in and compare again.

2. The expensive one delivers 1,050 units, the cheap one delivers 1,000. Divide by sellable units.

3. The expensive one ships two weeks earlier. Two extra weeks on shelf can be two months of selling season.

4. The cheap one wants a 50% deposit, the expensive one wants 30%. A deposit is money. That extra 20% is cash out of your business.

5. The cheap one cannot explain how it handles defects. “We will sort it out” is not a saving. It is risk, transferred to you.

Why quotes contain a buffer

Defects are the hardest part of this business. No factory is perfect, and no factory produces zero defects.

If defects run high, the order can lose money. I have had orders that lost money, and I still get one or two a year.

The reason is that production is complicated and touches a lot of steps. The bulk formula does not sit well with the packaging. The packaging does not fit the pump. The carton is printed wrong. It adds up.

So when I quote, I add 1% to 2% on top, depending on how difficult the product is and what my experience says. That gap is there to absorb defects.

I am not telling you this to justify a mark-up. I am telling you because a business that does not make money cannot stay in business. If I do a first order with no margin and a second order with no margin, I will stop working with that client. And what you lose then is a supplier you can rely on.

A message you can send to both factories

If you want two quotes you can actually compare, send this to both:

I am comparing two quotes, so I would like both answered on the same basis:
1. Is the unit price quoted with tax? With packaging? With filling?
2. What is the MOQ, and can colours be mixed?
3. What is the sampling fee, how many revision rounds does it cover, and is it credited against the bulk order?
4. Who sources the packaging, and how is loss handled?
5. What do tooling and dies cost, and who owns them?
6. Who pays for stability and microbiological testing, and how many rounds are included?
7. What is the lead time, and from which date does it run?
8. What are the deposit percentage and the balance trigger?
9. Is the trade term EXW, FOB or DDP?
10. What is the standard for defects, who pays for rework, and who pays the freight?

Also please confirm the produced quantity and the defect allowance this quote assumes.

Once both come back on those ten points, you can start comparing.

How we quote

We have been making herbal skincare since 2013: 12 production lines, 180 employees, 600+ formulas. Minimum order 500 units per SKU, around 15 days for private label and around 25 days for custom formulation.

The twelve-field table above is yours to use. Send it to us as well.

One last thing

A quote is not a price. It is a specification.

The company that writes the clearer specification is usually the company that runs the tighter operation. And a quote with nothing on it but a unit price is telling you something too.

Related reading: How to Read a Cosmetic Certificate of Analysis and White Label vs Private Label Cosmetics.

Related: For a full breakdown of deposits, balance payments, and letters of credit, read Chinese Manufacturer Payment Terms: Deposits and Balance.