Manufacturing Synergy: Decoding Private Label vs. Contract Manufacturing for Strategic Growth

Plastic products to show private label manufacturing
Examples of plastic molded toys made for private label manufacturing and contract manufacturing

For some business models, it’s helpful to look outside your own organization for a partner to fill a particular need. If your company has a product vision but not the manufacturing ability to actualize it, you might consider private label or contract manufacturing. These methods offer unique advantages and disadvantages you must consider while also analyzing your company’s true needs for a mutually beneficial partnership.

Should a private label manufacturer be the right solution for you, GAIM Plastics can provide innovative, custom plastic injection molding for your products and marketing needs.

What Is Private Label Manufacturing?

With private label manufacturing, you pay a manufacturer to produce their product under your brand. It’s ideal for companies wanting to sell an existing product without having the design and manufacturing capabilities to produce it themselves. The manufacturer controls the product specifications, materials, and processes.

Benefits of Private Label Manufacturing

Private label manufacturing offers a wide range of benefits:

  • Brand recognition. By placing your label on an existing product, you easily expand your brand’s reach. Instead of spending hours on research and development, you quickly add a desirable product to your core offerings without a massive investment.
  • Control of marketing and price. Private label manufacturing leaves product design and production to the manufacturer, allowing you to focus on marketing and your client base. You can modify your pricing and marketing strategy to maintain a competitive edge, without the added cost of developing an original product.
  • High-profit margins. With the product development already complete, you increase profits as your manufacturing partner has established processes and equipment as well as supply chain control. Also, as you’re using your own brand, you’re not paying a premium to purchase someone else’s.
  • Market stability. Brands typically sell private label products at more affordable prices without sacrificing quality. When the economy suffers, your customer base remains stable or even grows as consumers become interested in lower-priced options. With private labeling, you can also efficiently modify your production numbers, branding, and product lines.

Disadvantages of Private Label Manufacturing

While this is an excellent option for many businesses, it does have a few downsides:

  1. Low operation control. Though you can tweak some aspects, generally the manufacturer controls everything from design through production.
  2. Minimum order quantity (MOQ). These manufacturers typically require a minimum order, which can be problematic if you need a test run for a new product.
  3. Production dependence. Private label manufacturers make their own products under your label, so you’re dependent on them. Switching manufacturers means changing your product, affecting your established client base.

Interested in learning more about what to look for in Private Label Manufacturing? Contact GAIM Plastics!

What Is Contract Manufacturing?

With contract manufacturing, you outsource your product idea to a manufacturer that then produces it to your specifications. You’re responsible for the research, development, design, and testing.

Benefits of Contract Manufacturing

Contract manufacturing offers a variety of advantages:

  1. Flexibility. By owning the product design, you maintain control over the branding, product specifications, and quality testing. However, the tasks the manufacturer takes on will give your employees more time to focus on other work.
  2. Maximizing profits. You reduce the overhead costs involved with the production, thereby increasing your profits. Sometimes, you can negotiate lower pricing than with private label manufacturers.
  3. Scalability. Contract manufacturing allows you to scale your production without heavy investment. The manufacturers often have a network of suppliers worldwide to tap into.
  4. Expertise. By drawing on the manufacturer’s expertise, you gain help perfecting your product and eliminating costly design flaws. You capitalize on the manufacturer’s suggestions for advantageous processes and materials.

Disadvantages of Contract Manufacturing

Contract manufacturing has a number of disadvantages, however, including:

  • Miscommunication. Contract manufacturing requires ongoing communication throughout the production process. Miscommunication regarding product expectations and volume can result in expensive mistakes and longer turnaround times.
  • Intellectual property. When you outsource proprietary information to a manufacturer, you risk exposing yourself to intellectual property theft. The manufacturer could become a competitor, or they could sell your proprietary details to a rival.
  • Reliable partnership concerns. The entirety of the manufacturing process rests with your partner. Thoroughly vetting prospective manufacturers for their capabilities and past work will help you avoid using a company that doesn’t uphold similar quality standards.

Private Label vs. Contract Manufacturing: Which Is Right for You?

Private label and contract manufacturing each offer unique advantages depending on your product. Consider the scalability and originality of your product when deciding which method is best for you. Also, research all possible partners to examine their pricing, experience, and capabilities.

Private Label Plastic Manufacturing

For several decades, GAIM Plastics has offered superior standard, specialty, and custom injection molded products at competitive prices for varying applications from lawn & garden to industrial products. We are a leading private label manufacturer for customers in nearly every industry. Our proprietary products include using bio-degradable resins, making your product more environmetally friendly.

Contact GAIM Plastics for Your Private Label Plastic Manufacturing Needs
A family business in our second generation of ownership, GAIM Plastics aims to simplify the private label manufacturing process to make it not only beneficial but enjoyable for our clients with high-quality plastic injection molded products. We offer end-to-end solutions from 3D-CAD designs, tooling to warehousing and fulfillment.

To learn more about our private label manufacturing products, contact us today or visit our Private Label Manufacturing page.

GAIM Plastics – Your Plastic Injection Molding Company

If you have any questions concerning manufacturing your plastic components, reach out for a free, no-obligation consult.