How many units should you really manufacture?
Updated: Mar 18
One common question our clients here at the Clutch Made Factory ask is "how many units should I make?". It certainly is an important question, but there is no one-size-fits-all answer. The number of units to manufacture can depend on several factors such as the size of the business, the budget available and market demand. It's important to consider these factors carefully before moving forward with your projects, that is why in this blog post, we’ll go over these topics in detail.
Two important factors to consider are the size of the business and your budget. Typically, a larger business may require more units to meet demand, while a smaller one may need less units. If you want to avoid overproduction or underproduction, which can both result in financial losses, you might want to consider how established your business is in your sector.
Usually, a smaller, younger business will need some time to find their consumers and gain their trust as they create a strong sales channel. Also, the budget for production is usually a bit more limited. You also need to include the other expenses that will be incurred during the manufacturing process - the final cost of your product isn’t affected just by the cost of your production: other necessary expenses will include marketing, shipping, logistics' fees, the list goes on. So it’s important to take all of these factors into account and be real about the numbers as well as the process.
Market demand is also an essential factor to consider: It determines how much consumers are wanting a product for any given period of time. The market demand can be estimated by the number of people seeking your product, how much they’re willing to pay for it, and how much of your product is available to the public, from both your business and from your competitors. If there is a high demand for the product, it might be necessary to manufacture more units to meet that demand. This is where you do your market research, attainable enough for all who have access to the web.
The risks of producing either too few or too many units should also be taken into account. If you manufacture too many units, you can have extra inventory that takes longer to sell, increasing the cost of storage for your product, or eventually it all becomes outdated. Also, if sustainability is a priority, you might want to avoid producing an excessive number of units because, in certain situations, out-of-date products end up being discarded without being used. On the other hand, you risk missing out on potential sales if you manufacture too few products.
In conclusion, when deciding how many units to manufacture, it's important to consider several factors such as the size of the business, the budget available, the market demand, and the expected sales. By carefully weighing these factors, businesses can make a decision that will help ensure the success of their product and their overall business. It is important to take the time to consider all aspects of the decision-making process in order to make the best choice for the long-term success of the business. If you want to learn more about creating effective business decisions, schedule our Design Consult today! Our team will cover all the necessary steps for starting your brand and creating marketable products.