Glossary · Operations
What is Minimum Order Quantity (MOQ)?
Definition
Minimum order quantity (MOQ) is the smallest number of units a supplier or manufacturer will agree to produce or sell in a single order.
Why it matters
Suppliers set MOQs because setting up production has fixed costs. A higher MOQ usually means a lower price per unit, but it ties up more of your cash and raises the risk of unsold stock.
A founder wants custom water bottles. One factory quotes $6.00 each with an MOQ of 500, costing $3,000. Another quotes $8.50 each with an MOQ of 100, costing $850. The first is cheaper per unit, but if she sells only 150 bottles she is left holding 350 and has spent $3,000 for $1,275 in cost-of-goods used. The smaller order costs more per bottle but limits risk.
Negotiate by asking for a trial run, shared production, or a split between styles. Pre-sales can help prove you will sell through.
Common mistakes
- !Choosing the lowest unit price without considering how much cash it ties up.
- !Not asking suppliers whether a smaller trial order is possible.
Frequently asked questions
What is Minimum Order Quantity (MOQ)?
Minimum order quantity (MOQ) is the smallest number of units a supplier or manufacturer will agree to produce or sell in a single order.
What mistakes do beginners make with MOQ?
Choosing the lowest unit price without considering how much cash it ties up. Not asking suppliers whether a smaller trial order is possible.
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