- Find lower cost materials: We know, this is pretty obvious. And no, when we say find materials at a lower cost, it doesn’t necessarily mean to go for low quality materials. However, new sellers come up all the time or new tech that can provide the same raw material at a lower price. We highly recommend broadening your search to find cost effective materials because realistically this is probably our biggest cost and therefore, the first thing we need to look at to increase margins.
- Negotiate a discount or deal for the materials: Let’s say the above didn’t work and you’re stuck with your current manufacturer. Discuss deals or negotiate some type of discount with the current provider. Maybe free shipping to the warehouse or a reduction in the price based on amount of material, etc.
- Move the manufacturing elsewhere: Depending on your location, it could be that the current cost of manufacturing the products is a lot higher than somewhere else. Consider moving the entire manufacturing process somewhere cheaper, where the labouring costs are lower.
- Join or merge with larger organisations: Large orders can at times cost less. If you're a small company you might not be able to reap these benefits. But, if you can partner with another company, you can take advantage of this.
- Use technology and automate labouring where possible: Labour can be a huge part of the COGs, and sometimes technology could help and replace that human factor, reducing the labor costs.
Of course, there’s tons more ways to lower your COGs, but we’ll leave it at that for now.
As we see prices rise across virtually every sector, it’s important to consistently check where you can save, but also find ways to attain more sales.As eCom experts, our team understands inside and out how to grow a brand even in the most dire of times. With our online marketing services, we actively find ways to help brands keep their advertising costs low because as the competition thickens so does the cost. Just like your COGs.