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

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made in usa

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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, Alliance Rubber Company can provide innovative, custom rubber bands for your packaging 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

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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:

  • Low operation control. Though you can tweak some aspects, generally the manufacturer controls everything from design through production.
  • 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.
  • 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?

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:

  • 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.
  • 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.
  • Scalability. Contract manufacturing allows you to scale your production without heavy investment. The manufacturers often have a network of suppliers worldwide to tap into.
  • 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.

Questions to Ask Yourself

Some important questions you should ask when choosing your manufacturing method are:

How is my product different from others? Does mine differ only slightly from an existing one, or is it a new concept?

You can use a private label manufacturer to slightly tweak an existing product, eliminating R&D costs. If your product truly is a new concept, you can invest in full product research, development, and testing and go with a contract manufacturer.

What resources do I have? What else is necessary for production?

If you can source your own materials, you may save with contract manufacturing. If you don’t have resources in place, it’s better to partner with a private label manufacturer with an established supply chain and manufacturing process.

What can I expect my ROI to be? What are my final production goals?

Determine the scalability of your project and whether you can save time and money by branding a private label manufacturer’s existing product rather than investing in the full development process. If your product is unique, you may instead save money with a contract manufacturer.

What factors would influence my ROI?

Economic fluctuations, shipping disruptions, and equipment costs affect manufacturing. Consider every aspect of your supply line. Private label manufacturers will generally have established relationships and suppliers for their products, while third-party supply chain delays can affect contract manufacturing.

Private Label Manufacturing for Rubber Bands

For nearly a century, Alliance Rubber has offered superior standard, specialty, and custom-printed rubber band products at competitive prices for varying applications from office use and packaging to industrial operations. We are a leading private label manufacturer for customers in nearly every industry. Our proprietary products include the Open Ring® band, imprinted Ad Bands®, and Fragrance Bands. We’re also one of only two U.S. companies to win the Excellence of Innovation Award from the National Institute of Standards and Technology.

We’re capable of printing various rubber band sizes, colors, and materials for wristbands, product labeling, and packaging. Whether you need simple bands for mass mailers or durable bands for agricultural produce, Alliance Rubber has the perfect private label solution for your brand. To learn more about how to find the right private label manufacturer for you, check out this piece on private label manufacturers!

Contact Alliance Rubber for Your Private Label Manufacturing Needs

A family business in our third generation of ownership, Alliance Rubber aims to simplify the private label manufacturing process to make it not only beneficial but enjoyable for our clients with high-quality rubber bands and fast shipping. We offer over 2,200 tools and products to fulfill clients’ custom rubber band needs, bringing thousands of branded products to market.

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

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Alliance Rubber Company is a family-owned business with humble beginnings that has grown into a thriving American success story. Since 1923, Alliance Rubber has proudly produced rubber bands for use in the home and workplace. Continuing to manufacture its products in the USA, enables Alliance to provide high-quality products, fast service, and fresh stock that is built to last. Alliance Rubber, a women-owned company, manufactures bands that ‘Hold Your World Together.’

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