Private Label

What is a Private Label?

Differences between Private Label & Custom Contact Manufacturing?

There is a lot of confusion about the differences between private label and contract manufacturing as well as advantages and disadvantages that come with either solution. Both solutions can work well, but will depend fully on the final product requirements from the client. Ultimately the end goal for either solution is the same, to create a great product that customers will love and buy.

Advantages & Disadvantages of Private Label and Custom Contact Manufacturing

Advantages
Disadvantages
Quick and easy access to the product (No formulation, packaging sourcing needed)
Lower start-up costs (Product is essentially ready-to-market)
Total control over the product
Relationship gives the client access to professionals (The manufacturer is an expert in making product and can improve upon it)
Brand Control (client decides on branding, and packaging)
Product quality can be superior
Lower unit costs
Client own the formula IP (note that not all contract manufacturers are made equal and may not freely release product formula intellectual property, this is one thing that separates Dynamic Blending from other contract manufacturers. Dynamic Blending does not hold paying clients captive for custom formulation)
Private Label
Custom Contact Manufacturing
Competition in the market (Multiple companies may be selling the exact same product)
Limited marketing (The manufacturer can decide or set requirements for label design inputs on logos and copy)
Set Pricing (there is generally no negotiation of price)
Limited inventory control (The manufacturer normally retains full control of the product. They can choose to change/tweak the specifications, the ingredients, packaging, formulation, and other things as they see fit)
Limited/No package customization (Packaging is generally predetermined and may have limited options for customization)
Higher start-up costs and longer development time
Private Label
Custom Contact Manufacturing

Private Label

When companies purchase products using private label manufacturing, they are essentially putting their name on a product that a manufacturer has already designed and manufactured. The manufacturer usually retains control over these products, specifications, quality and manufacturing process. In other terms, the manufacturer is the owner of the product ip (intellectual property).

“As a Full Turnkey Contract Manufacturer, our team can offer you with advice and expertise in an ever changing competitive market.”

Custom Contract Manufacturing

In contract manufacturing, the buyer approaches the manufacturer to work on the design and manufacturing of a product per spec. While the manufacturer will often offer advice and expertise, it is the buyer who retains final say, responsibility, and control over the product produced.

The Conclusion

There are pros and cons to private labeling vs custom contract manufacturing. It is important to understand the differences between the method you choose. Custom contract manufacturing ultimately provides the client more freedom over the overall product and gives a better price advantage on each unit that is produced.

 

If you are interested in manufacturing a product, please contact our team at Dynamic Blending to discuss any questions you might have.

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