What is MOQ?
MOQ (Minimum Order Quantity) · Also called minimum order quantity, minimum run, minimum production run, minimum batch size
MOQ, or minimum order quantity, is the smallest order a supplier will accept under its quoted terms. It can apply to a finished product, an ingredient, a package or a production run.
What it is
A quote may state its minimum in units, cases, pounds, gallons or hours of line time. Check whether it applies per SKU, per flavor, per packaging design or to the whole order. A minimum batch and a minimum purchase are not always the same thing.
You will usually face more than one minimum: your co-packer, your ingredient suppliers, your label or film printer and your container supplier each have one, and each is its own cash commitment. A large packaging minimum does not have to force a matching production run if you can store the extra packaging and use it on later runs.
Minimums exist because every run has fixed costs: setup, changeover, cleaning, quality checks and paperwork. Spreading those costs over more units is what brings the price per unit down.
Why it matters
MOQ decides how much cash you tie up before you sell anything. A run that is cheap per unit can still be a bad deal if it locks up money you need for marketing, or leaves you holding stock that expires before you can sell it.
The run also has to fit your usable selling time, not just your total shelf life. Subtract the time for production, transit and quality release, and the remaining shelf life your retail customers require at delivery. Plan with a slower-sales case as well as your base forecast.
Minimums also limit how many SKUs you can launch, because each flavor or size usually has to meet its own. Many brands start with fewer SKUs and add more once one is selling.
Formula
Months of inventory = Finished units ordered ÷ Expected units sold per month
This assumes steady demand. Compare the result with your usable selling time after production, transit, quality release and your customers’ remaining shelf-life requirement.
Worked example
Lower minimum or lower unit price
- Option A: 5,000 units at $2.00 each costs $10,000.
- Option B: 20,000 units at $1.40 each costs $28,000.
- You expect to sell 1,000 units a month, so Option A is 5 months of stock and Option B is 20 months.
- The product has a 12-month total shelf life, so Option B cannot sell through in date. If your customers require 6 months of life remaining at delivery, your practical selling window is shorter still.
- Option A also commits $18,000 less cash, before storage, freight and packaging obligations.
Common mistakes
- Comparing only the quoted price per unit. Compare cost per sellable unit, after spoilage, storage, financing and the stock you never sell.
- Not asking what can bend. Ask about pilot runs, a higher price for a smaller run, split runs across flavors, shared packaging, and blanket orders with scheduled releases.
- Skipping the commercial terms: deposits, who owns unused materials, storage charges, and what happens when materials expire.
- Launching too many SKUs at once, so each one has to meet its own minimum.
Common questions
- What is a normal MOQ?
- It depends on the equipment, the process, the materials and the supplier’s own economics. Get current written quotes for your exact specification rather than relying on a general range.