What are the manufacturing costs for making custom ODM products in China from scratch?

Written by

Dan Blinman

If you want to build a custom ODM product in China and it has never been done before, it’s not easy to calculate the manufacturing costs. Good contract manufacturers will put an entire team of people onto a project - just to put the quotes together for their customers.

But what if you could see what the contract manufacturers in China were quoting - for a range of different projects in the soft goods, hard goods and electronic categories? For products using materials such as wood, plastic, metal and paper..?

I’m talking about actual quotes here - for projects with real customers that paid and went on to the development phase and beyond. 

You’d be able to find a product similar to your idea and then compare the costs. It would give you a rough understanding of what your custom ODM product might cost, and you’d know where the money was going too.

Sound good?

As a contract manufacturer based in Guangzhou, China with over 200 active customers; we get asked “how much is this going to cost” all the time.

So we are actually saving our team time by putting this together for you. 

You get an inside look at the real quotes from a successful contract manufacturer in China. (Who doubled in size during the pandemic when some of the competition went out of business.)

And our team gets to save time by communicating with prospects who are better educated on the manufacturing process

It's a win - win.

We know how important this is to you and your business - it’s impossible to plan for the future without knowing how much things might cost.

And although the costs we are about to provide can only be used as a benchmark, because your product is going to be different. We are confident that it will help you on your journey in bringing your product idea to life.

Alright, without further ado, let's start by discussing exactly why it is so difficult to put these costs together.

It should give you some insight into the planning that good manufacturers are putting into projects, before the “real work” even begins.

Why is it difficult to get accurate manufacturing costs when building custom products in China?

So you are looking to build something in China that has never been done before? 

Well - that answers the question then doesn’t it? It’s difficult to get accurate manufacturing costs for custom ODM products in China because it has never been done before!

There’s not much to compare it to. Sure, we could find a similar product on the market and reverse engineer it.

But the answer to the question “why is it so difficult to get costs for custom products in China” depends entirely on your choices. 

Yep. That’s right. You get to choose. 

Any good contract manufacturer in China is asking you if you want to prioritize the price, speed or quality before work even begins.

So as the customer, you are determining what it will cost depending on your priorities for the product. 

The thing to keep in mind here is that we are not just looking at the price of a commodity. We aren’t simply buying a lump of coal at a particular weight - where we are able to compare the prices for existing coal on the market, at that weight.

We are building a custom product in China from scratch. There’s so much more going on here than the price of the raw materials, so there’s nothing to really compare it to.

So when you stop and think about what it takes for a contract manufacturer to quote a product, the raw materials are just one part of this equation. The costs there will vary depending on how many components are involved and how many different materials you need. 

But when building custom ODM products in China, that’s just the beginning. Then there’s the processing of those raw materials. Then labor costs, rent, staff salaries, the list goes on. 

This is why it is difficult to get accurate manufacturing costs when building custom products in China. (and why it doesn’t make any sense when people are able to quote you quickly)

Not everybody takes a long time to get you a quote. You can go to Alibaba and find a queue of “suppliers” who can price everything up for you within 24 hours. (They say “suppliers”, but most of them are just trading companies.)

So how does that work? And how are Alibaba's quotes different to the ones we are about to share with you at the end of this post? 

Let's get into that next…

What Happens Differently When Alibaba Provides Quotes For Your Custom ODM Product?

When people on Alibaba are quoting you, they frame it by looking at similar products. You are not getting a complex development quote and you are not finding factories and seeing what products they have made. 

The factories behind the quotes are using a framework and adding in enough margin to compensate for whatever losses they might accrue, depending on the complexity of what you are doing.

So for example, to keep it simple let's say $20,000 is the standard price for a product like the one you are trying to make, but yours is a bit more complicated. What they will do is they will quote you a random number where they know they have easily covered their bases. 

Or sometimes they will quote you something low enough where they wont cover their bases, but they know they can change the price on you later once you are already committed. 

So they are not doing a lot of work on those quotes. Surely there are exceptions, but for the most part you are getting a rough idea of what your quote might possibly look like.

The quotes you are about to see at the end of this post were valid for our customers for 30 days. Occasionally people have come back to us 2 years later and asked: “why has the price gone up.”

Well, let's start with inflation, right?... Then there’s increasing labor costs, fluctuating component costs, the pandemics affecting shipping costs.

Fact is: Costs change in manufacturing. All the time.

So our quotes are valid for 30 days because they are actually accurate at that time. After 30 days, things might have changed.

It means that when working with companies like us, the quote you get can be shown to your investors. You can use it to price out your website. You can price out wholesale to brick and mortar. 

It’s a number you and your team can actually get behind and feel confident about. Our Business Development Managers aren't giving you random numbers. 

First the operations team speaks with our Account Managers, and the AM understands the in and outs of the entire project.

Our director of operations oversees that process and makes sure that everything is understood from the customer side and our side too. Lots of customers don't know what they are doing and that complicates things so we have to ask questions to frame it properly. 

If they do know what they want, then we have to completely understand that -  down to a millimeter, or a pantone color. We have to fully understand every detail. 

Then the engineer team looks at the product and makes sure it makes sense from a DFM standpoint. If it isn't DFM ready, we have to develop it. That would be part of the quote too and the engineer would need to spend more time looking at exactly what is needed.

If it’s DFM ready then it goes to the purchasing department who breaks it down into components, using our book of suppliers we will quote it with the people most suitable to do it. 

Alibaba dont have different departments communicating in this way. They take their quotes and send it to random factories - probably people they never worked with.  

We break it down into different components. If someone wants to make a metal product, looking at the size/complexity we can narrow it down to a handful of suppliers we have already worked with. (You can read about our CCM method for an explanation on how we remove the need to trust these suppliers, by breaking down the components in this way.) 

Then we take each of those quotes and come up with a plan on how we are going to manufacture and assemble it, and then we work in all of the costs associated with doing that. 

We include quoting for logistics & domestic logistics - how to move component A to B to C to assembly and finally to QC. We QC everything in house. We have a separate team of people for that.

So when you look at all of those pieces it makes more sense why we take longer to quote than Alibaba. We have so many questions to ask you before we can even get you a quote! First, we want to know : “do you want to make the best quality product on the market” (Unsurprisingly it’s going to affect the costs if you do.) 

After hearing all this, it also makes no sense why people are able to quote quickly, that's the biggest issue we have had with the manufacturing industry since day one.

After 24 hours of your enquiry, they say: “here’s the quote ” - “what, wait? How did you quote it that fast?”

They are quoting enough they know they can get by, and enough that covers their margins. But the prices are going to change, they haven't done the work it takes to properly quote something and to be perfectly honest with you:

They are just firing numbers out of their ass.

So that’s what happens differently when somebody from Alibaba quotes for your custom ODM product.

Anyway, I’ve kept you waiting long enough.

It’s time to reveal the goods.

Real Quotes From Custom ODM Products At MorphoMFG - From $10k to $200k

Before I share the numbers you should know that these are our quotes from real customers here at MorphoMFG. 

And we pride ourselves on helping our customers build the best brands on the market - the Rolls Royces and Rolexes of every industry. With that in mind, we refuse to compromise on quality.

So whilst we are positioned in the center of China’s manufacturing hub and are working with some fantastic talent and experienced factories; it’s worth remembering that we describe ourselves as the best in the business and our prices reflect that. 

You will be able to find a cheaper quote elsewhere and it’s beyond the scope of this article for me to explain why our prices are higher. (We’ve already explained why in this article, which walks you through our component control method)

In short : we are more interested in making our customers more money by building the best products in the world, rather than saving our customers money by cutting corners on the quality. 

But it goes without saying : it's cheaper to work with any manufacturer in China vs somewhere like the U.S. 

It’s still cheaper in China. Although, the costs have risen to match the fact that China has been leading the charge in manufacturing now for over a decade (and the skill level and wages of the people here have evolved to match that)

Also, if you didn’t know this already - the Chinese are the hardest working people in the world. Bar nobody.

Anyway, that’s enough rambling from me. 

But it’s time to give you what we promised -  real quotes from our actual customers.

Remember - to answer the question : “What are the manufacturing costs for Custom ODM products in China?”, It's important to keep in mind that every answer is going to be different for every person - because every product is different. 

But this is our best effort to open up all of the possibilities of what we are doing, by showing you a range of real quotes from different product categories.

For obvious reasons, the names and brands have been removed to protect our customers. But we have provided enough detail to give you what you need, without jeopardizing the identity of our customers.

Okay. Let's get into it:

1) Textile - Luxury Playmat - $11,150

We will kick this off with the cheapest quote on this list, for this luxury playmat. Around $10k is the smallest you can spend to get anywhere with your product idea, when working with a contract manufacturer in China. 

This quote was small because the customer had already taken care of research and development. The design and pattern was also provided by them.

We did off the shelf packaging using the customer's design - so a fairly simple build here which is why the cost is so small.

2) Electronic - Game - $53,500

This client came to us with just an idea and had done next to no preparation, which is why this quote is considerably higher than the last. She asked us to take care of everything, and so we did!

We handled design, development, engineering, and prototyping for this electronic game for kids. Once that was done, we took care of the molds and then the manufacturing.

Our offices are located within the PRD - which is the Pearl River Delta, the world’s workshop and a major manufacturing base. (Where many of the best factories and engineers in the world are located.)

We are also incredibly close to Shenzhen, which is widely considered to be the world’s largest (and best) market for electronics. Our team are traveling back and forth there every week, 

Proximity is extremely important in manufacturing - that's a huge part of why this product worked out so well. 

3) Paper - Board Game - $16,500

This quote for $16,500 covers the prototyping phase as well as some samples, molds and tooling. Die cut design for packaging is also included in this fee.

This quote was somewhat challenging for us despite the smaller fee because pantone numbers are one of the hardest things to match - people often use their computer and pick a color, without fully knowing what pantones are. This is exactly what happened when we manufactured this board game.

The customer selected pantones that ended up not being exactly what they wanted. So we switched to another pantone color and had to redo everything.

Die cut design for packaging is included in this quote as well as the board game and the pieces. So there’s paper packaging, paper board, and then die cut for the packaging. Then there were 2 rounds of sampling to perfect the colors. 

Finally, this particular client wanted a more expensive mold, which we often recommend to our more serious clients, so that they can manufacture more products before the mold needs replacing. 

They had the choice of making 50,000 of the product using a cheaper mold, or paying more for a mold and getting 300,000 out of it. Those numbers are of course relatively vague but hopefully you get the point.

The better mold here made sure that when we stamped and cut down all the puzzle pieces, they stuck to it with ease. Then it was easy for them all to fall off into one container so we were not missing any pieces.

4) Metal - Electronic Seasoning - $54,650

This client over engineered everything so we had to bring in a whole team of engineers and take their files and make them DFM ready.

So this quote was based on us fixing a really bad prototype and design files. In these scenarios it’s actually easier for us if they come to us with no preparation because the client often thinks they are further along in the process than they actually are.

We have to then explain why they need to spend all this time and money fixing something that they believed was already ready. And this happens more than you would think.

Included in this quote is industrial design. mechanical design, market research, brainstorming, appearance, design proposal, silk screen drawing, process drawing and structural drawing.

There were 8 people involved from 3 departments to make this prototype DFM ready, and from there the product was finally ready to move to the next phase of manufacturing.

5) Tech - Electronic - $111,240

For this project, the client had specific requests from their investors and so we helped them through that preparation phase, to get them projections. From there they had the price points at different quantities and could pitch for further investment. Molds were a big part of this investment.

They delivered the firmware and we developed how the software works with their hardware. And then we put the firmware into the hardware for them.

After that they were at the mass production phase which was where we really helped them scale, guiding the communication with their investors throughout the process.

6) Tech - Electronic - $231,680

This client came in with working software + design files and a team behind them. So they had many things in place and just needed somebody to execute for them. The product itself is also fairly big meaning the molds were expensive. 

They actually had subsidies from the government because they are in a cool space and the product is good for the environment.

We used his tech and put the firmware into the hardware. They have been at the mass production phase with us for years now and it's a very profitable product.

That’s it - 6 quotes from real customers here at MorphoMFG. As you can see, the costs vary each and every time because we are building something unique here. It takes time, planning and an entire team to put together these quotes for our customers, which is why we charge for our onboarding process.

But when we give you the quote, you know that you can trust the numbers that we give you. If you are interested in getting a quote for your project, then you can schedule a call with our team here.

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