Are you looking forward to creating a product of your own? That’s great. But how do you plan to make it?

Production is critical. It determines the amount of control, customization, and planning that goes into your desired product. You might find yourself in a dilemma, especially if you are not an in-house manufacturing unit and need outsourcing.

Here’s the good news – outsourcing usually comes with just a couple of options.

Then what about the bad one? These options are ghastly different.

Let’s hear how contract manufacturing is different from private label, and enlist the various pros and cons associated with each one of them.

CONTRACT MANUFACTURING (CO-MANUFACTURING OR “CO-MAN”)

You build your own cosmetics here. You choose everything, from material to the packaging, and hire a contract manufacturer to build the final product you want to sell under your brand.

Some companies might be fond of the high level of autonomy. But it’s a lot more work and withdraws more money. Because contract manufacturing is typically about multiple vendors working for your final product. The process involves more stakeholders, more supply chain complexity – and ultimately, more money.

But the relatively more investment in contract manufacturing shouldn’t disappoint you. The process assures you lucrative returns.

Contract manufacturing allows you to choose your own materials, so you try to get your hands on the best. This helps better differentiate your products and ultimately provides your brand with an edge in the market.

This process allows novel ideas to get to the market as contract manufacturers need to follow the specifications you provide.

In a nutshell, if your desired product is unique for the current market, has a strong projected return on investment (ROI), and you plan to make a lot of it, go for contract manufacturing.

PRIVATE LABEL MANUFACTURING

This popular option is quite known for “generic products”. But generic, in no way, implies cheap or bad. In fact, private label products have started becoming highly competitive in the market these days.

While contract manufacturing desires a lot of inputs, private label reduces the number by a significant margin. The product development cycle also gets shortened.

Also known as the “off-the-shelf approach”, this option requires you to find a suitable private label company that produces products similar to the ones you have in mind. When you feel you have found the ONE, you can use the private label manufacturers, and boom, you have successfully extended your product line.

Private labeling doesn’t offer you much control over the production process. But it also gets rid of huge upfront investments and long development periods. This option is a much lesser strain on resources, and therefore, is great for smaller companies or the ones aiming to test the waters.

Nevertheless, if well-leveraged, both the options have almost equal potential to get you a breakthrough. While taking a pick, don’t forget the product specifications, resources you have and require, and ultimately your end goal.