As a screen printer, establishing a minimum order quantity (MOQ) is a common practice for successful print shops. So no matter if you’re a seasoned screen printer or just starting out, understanding the pros and cons of implementing MOQs, can greatly impact your business.
Below, we will dive further into why you’d set an MOQ for your shop and explore the pros and cons of doing so in your printing business.
What Is a Minimum Order Quantity (MOQ)?
A minimum order quantity is the minimum amount of a garment or item that a client must order from your shop. This is an amount you will calculate internally based on your labor costs, materials, and other considerations.
Some screen printers set minimum order quantities to ensure they’re earning enough profit for the work that goes into an order. Such work often includes creating a custom design, purchasing certain screens, setting up your machinery for the order, ordering specific ink colors, and more. As such, you may determine that it’s not worth all the hassle for just one or a few items.
For example, if a customer wants to order custom tote bags, you may have set a minimum order quantity of 15 for the job to be worth it for you. Plus, you can have varying MOQs for different items, like 25 for hats, 20 for shirts, 15 for tote bags, and so on. So if a customer wants to order only 6 tote bags, for instance, they’d have to at least order the minimum amount of 15 or find another print shop for the job.
Each shop owner will have to determine for themselves whether they want to set minimum order quantities. Keep reading below as we lay out some of the main pros and cons of MOQs to help you make the choice that’s right for you.
What Are the Pros of Having a MOQ?
With a better idea of what MOQs are and why you’d set one for your screen printing shop, we can now go over some of the main advantages that this will provide you.
One of the main reasons to set up a MOQ is that it helps your profitability. When you’re only processing large orders, you can start to take advantage of economies of scale. In other words, the per unit cost decreases with each additional item you create–which helps your margins.
Enhanced Product Quality
Another bonus of setting MOQs is that it can enhance the quality of your output. With larger orders, you can have more control over the consistency and quality of your production. This is because you’re avoiding frequent setup changes like you would with smaller orders, which minimizes the risk of variations in color and alignment.
Less Administrative Tasks
It goes without saying that when you’re managing a few large orders, there are much fewer administrative tasks than when you’re dealing with a lot of small orders.
This lower administrative burden helps you focus more on what you do best–screen printing, and less time on back-and-forths with clients, order processing, sending invoices, and more.
What Are the Cons of Having a MOQ?
Though there are benefits to setting a MOQ for your screen printing business, there are some potential downsides to be aware of.
Risk of Client Dependence
When your store is relying on large orders from just a few customers, your revenue is not diversified and you become reliant on those larger customers. If one of the clients were to cancel their order, their demand slows, or they take their orders elsewhere, your revenue could suffer.
Smaller Client Pool
Some customers will come in only needing a limited amount of items printed, or maybe have a limited budget. As such, they may not be able or willing to meet your MOQ just to get the job done at your shop. So when you set MOQs, you are limiting the potential customers for your shop–resulting in missed revenue opportunities.