Glossary · Product
What is Private Label?
Definition
Private label is a product manufactured by a third party exclusively for one seller, who sells it under their own brand, often with custom specifications.
Why it matters
Unlike white label, where many sellers can get the same item, private label usually involves a custom formula, design, or exclusivity. This allows stronger branding and better margins, but typically requires larger orders.
An entrepreneur has a manufacturer produce 1,000 custom-scented soy candles at a unit cost of $4.20, for $4,200 upfront. Selling at $22 each yields $17.80 gross profit per candle, or about 81 percent margin, and $17,800 if all sell. If only 400 sell, she holds 600 candles and a $2,520 inventory cost.
Ask about minimum orders, sample runs, and quality standards, and confirm any product safety or labeling rules that apply to your category.
Common mistakes
- !Ordering a large first batch before validating demand with samples or a pre-sale.
- !Skipping required labeling or safety testing for the product category.
Frequently asked questions
What is Private Label?
Private label is a product manufactured by a third party exclusively for one seller, who sells it under their own brand, often with custom specifications.
What mistakes do beginners make with Private Label?
Ordering a large first batch before validating demand with samples or a pre-sale. Skipping required labeling or safety testing for the product category.
Related terms