4 Tips to Keep Product Costs Down
As a Startup, with limited resources, time and money are working against you. In order to succeed, you must go the most out of the small funds you have. Below 4 tips will help you to keep your product costs down when importing from Asia.
1. Focus on one or two products.
Don’t try to start off by launching an entire collection of products – especially if these are so different that they require separate manufacturers.
Every product is an investment, in terms of time and money. Finding the right manufacturers, drafting specifications sheet and buying samples, take a ton of time and quite a bit of money.
If you spread too thin before you even have something to put on the market, chances are that you’ll never get there in the end.
As a Startup or small business in general, your only strength is your expertise. You must be focused on one product if possible.
2. Keep your design simple
It’s typical that Startups, be in software or e-commerce, run out of money as they try to perfect their product into infinity. As you launch a product, you cannot afford to get hung up on features that don’t really matter.
I’ve seen time and time again, how importers set design and functional requirements, that are either very expensive to reach – or even impossible.
In most cases, this is due to a lack of experience. There are physical limits to what can be done in manufacturing.
Also, too many design details or functions increase the risk of severe delays, or even failure to produce a single product sample.
Indeed, you should not compromise on design requirements and functions that are core to your business model. That said, keep things as lean as possible – and further develop your product once it’s proven on the market.
3. Don’t spend too much on new tooling
Every custom designed piece of metal or plastic requires an injection mold. The more custom designed pieces of metal and plastic needed to assemble your product, the more money you’ll end up spending on tooling.
If you want to keep costs low, you should try to use existing tooling to the extent possible. For example, you could put off a new product packaging design until the next order.
4. Start out with just one target market
The United States and the European Union have different sets of regulations. So does Korea, Japan, Russia, Singapore, Nigeria and India.
For every market you attempt to enter, you need to provide a new set of compliance documents and test reports.
This takes time and costs money. Third-party laboratory testing is not cheap. In fact, it’s a major expense on many importers’ balance sheet.
Testing costs are charged based on the number of products, or materials, and the number of different regulations (to which a product shall be checked).
In short, you’ll save yourself a lot of time and money if you decide to focus on one market to begin with.