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small business help - information - news and start up advice arrow Business Start Up arrow Outsourcing Manufacturing and Competing on Price

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Outsourcing Manufacturing and Competing on Price


Outsourcing Production

One way to solve the problem of manufacturing is to outsource it to another company, whereby they manufacture the product on your behalf.

This can help provide more complex or larger scale production without you needing to pay for equipment or premises costs, but will normally result in a larger cost per unit than if you produced the same goods yourself. There is also a risk of quality issues if the outsourcing company is unknown or new to your type of product.


Outsourcing is much more common in larger businesses, but should be considered (as well as the use of asset finance and factoring) if you need large scale production but cannot afford the equipment or premises costs.

Some smaller businesses use homeworkers to produce goods in their own homes, and send them on to the company; this can be suitable where the product is simple to put together, but otherwise the process of training is usually too difficult to make it cost effective.

Can You Compete on Price?

Once you have an idea of the cost of your product, you need to look at whether it can compete with existing products on price and value for money.

If your product is one of a kind, price is likely to be much less of an issue than if you already have several competing products. When other similar products exist, you may have to sell with a smaller profit margin to keep your products competitive.


Article Index

1. Introduction
2. Startup Finance
3. Loans, Credit Cards & Overdrafts
4. Grants & Subsidies
5. The Business Plan
6. Product Manufacturing
7. Outsourcing

 8. Is There a Marketplace for Your Product?
 9. Patents and Intellectual Property Protection
10.Product Administration
11.Choosing Premises
12.Product Selling
13.Exporting
14.Pricing
15.Useful Links



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