What is an MOQ? Minimum Order Quantities Explained [Part 2]

How to determine minimum order quantity?
Minimum order quantities (MOQ) are determined by factories and suppliers by assessing their direct and indirect operational costs such as labor, production set-up, upstream costs and minimums of the materials for manufacturing, and assembly set-up and costs. This helps them determine what the cost of goods sold (CoGS) is and how many they need to produce in order to achieve a certain profit margin.

How to lower MOQs?
To achieve lower minimum order quantities, you can typically work with original design manufacturers (ODMs) and purchase products that they're already producing with little to no customizations on them.

ODM suppliers will typically keep a small amount of stock to sell or sell via channels like trade agents, so when you send them an order they'll account for this order in their production.