The Difference Between Contract Manufacturing and Private Label Skin Care

Lately, I have had lots of people asking me the difference between contract manufacturing and private label. So I thought I would write a quick post about the difference.

 

If it’s your intention to start your own skincare line then this is some crucial information to help you on your

path:

 

 

Private label is the process of taking a manufacturer’s already tested formula’s and adding your name and logo to it.

• Generally the manufacturer does not allow any tweaking to the formula.
• The formula is already tested and proven which is a huge advantage as they have already worked out the kinks of stability and micro testing are completed.
• The turnaround time is much quicker – this is where the real time is saved as you are not reinventing the wheel.
• It’s easy – all you do is provide graphics and handle your own marketing and take someone else’s work.

The Downside of Private Label:

• You may not like all the ingredients in the formula.
• Any minor tweaks to you may be significant formula changes causing it to fall under custom manufacturing.
• Simple things such as scent and color are usually minor. However, adding “actives” to a formula is generally considered custom formulations.

 

1. Esthetician

2. Ecommerce owners

3. Spa owners

4. Salons

5. Boutiques

6. Resorts

7. Fundraisers

8. Grocery stores

9. Retailers

 

 

1. People who want “their” own formula – and I’ll explain why the “” later.

 

2. People who need better profit margins. If you are doing high volume distribution and need to be sure to have better profit margins often times you can customize a formula to meet your price point.

 

3. People who don’t want to compete with the manufacturer.  Many manufacturer’s have their own lines, so be sure to ask that when working with the manufacturer. Ask do you have your own brand? Can you sign a non-compete in x marketplace?

 

 

Custom manufacturing is where you provide the manufacturer with your recipe and/or ingredient list and/or a similar product and have them create something similar for you.

 

 

1. Cost – custom manufacturing incurs lab time. Average lab time is from $150-$195 per hour.

 

2. Time – new product development is a minimum of 3-6 months.

 

3. Finding the right lab that does the work you need. Some people specialize in shampoo/conditioners, some don’t touch it. So the time it take to find the right fit can take a long time.

 

4. In the end you still don’t own the formula. You have the ingredient list but unless you negotiate upfront to own the formula with mixing instructions there will be additional cost often times in the 2-5K range.

 

 

1. Make their own products and are ready to grow.

 

2. People who make their own products and are tired of it.

 

3. Businesses that want to launch their own unique brand.

 

4. Business that have an exclusive technology and/or idea and need it made just for them.

 

5. Anyone who is currently making their own products and is ready to expand.

 

6. Anyone who ready to create a product and market.

 

7. Someone with a unique product – think piggy paints, spray make up, etc.

 

So that’s the difference between contract manufacturing and private label. If you have any questions or want to leave a comment please feel free!