What is MOQ? Definition and How to Calculate
FAQs
What is an MOQ?
MOQ stands for "minimum order quantity" - the smallest order a supplier will accept. MOQs help suppliers cover production costs.
Why do MOQs matter?
MOQs encourage larger purchases. This allows retailers to get better rates, reduce slow sellers, and increase inventory turnover.
What are some typical MOQ examples?
Common MOQs include 1,000 unit production runs for manufacturers or 50+ units/$500+ orders for wholesale deals.
How can MOQs benefit my business?
Higher MOQs incentivize bulk orders so you can negotiate discounts, avoid storage fees and write-downs, and quickly sell through stock.
How do I calculate an appropriate MOQ?
Consider product demand, desired profit margins, warehouse costs, and how quickly you'll sell inventory. MOQs should align with sales velocity.
Can I negotiate MOQs with suppliers?
Yes. Request overstock/lower-quality units, ask about lead times to stagger orders, or partner with other buyers.
What happens if I can't meet an MOQ?
Suppliers won't fulfill orders below MOQ minimums. Consider negotiating, waiting until you have sufficient demand, or finding alternate suppliers.
How can I manage cash flow around MOQs?
Careful inventory planning, volume discounts, and negotiating payment terms can help ease cash flow from large MOQ orders.
