Many experienced importers already know that factory quotes include more than just the cost of production. What’s less obvious is how much those extra services add to your total cost — and how much you could save if you unbundle factory services.

In China sourcing, this approach can reveal hidden markups on packaging, manuals, accessories, logistics, and even currency conversion. By breaking these out, you can take control of your Bill of Materials (BOM), work directly with specialist suppliers, and keep more of your profit.

When you get a quote from your factory, it often feels like a single, non-negotiable price. They offer a convenient, all-in-one service: sourcing packaging, printing inserts, procuring accessories, and arranging shipping to the port (Free on Board (FOB)).

This convenience? It’s costing you a fortune.

Your factory is an expert in making your core product—but they are not experts in making boxes, printing manuals, or sourcing cables. For every service they bundle, they subcontract it to another factory and add a markup for their time and effort. You can read more about this in our guide on who’s really making your products (the hidden truth about supplier subcontracting.

If you want to unlock next-level profitability, you need the Aggregator Playbook: unbundle these services, take control of your Bill of Materials (BOM), and source components directly—especially if you’re working in China sourcing.

Table of Contents

1. Why Factories Overcharge for Bundled Services
2. Hidden Markups You’re Likely Paying
3. Your Action Plan to Deconstruct COGS
4. The Payoff: More Profit, More Control

Why Factories Overcharge for Bundled Services

Factories focus on manufacturing your main product. The rest—packaging, inserts, accessories, shipping—they outsource. Each time they subcontract, they add a markup. This is common in China sourcing, especially for eCommerce sellers who accept “all-in” quotes without questioning the breakdown.

By unbundling these services, you can source directly, often at a better price, with better quality, and faster lead times.

Hidden Markups You’re Likely Paying

Here’s where those extra costs creep in:

• Packaging (8–15% markup): Your factory sends box orders to a sister company or local supplier—adding their cut.
  
• Inserts & manuals (10–20% markup): They’re not a print shop, but they’ll charge as if they are.
  
• Accessories (10–30%+ markup): Wrenches, USB cables, adapters—these are sourced from specialist factories and heavily marked up.
  
• Logistics (Free on Board (FOB) vs. Ex Works (EXW)): By handling transport to the port (FOB), they add a buffer. Organizing pickup yourself (EXW) can be cheaper.
  
• Currency (2–3% markup): Quoting in United States dollars (USD) lets them pad against currency risk. Paying in Chinese yuan (RMB) removes this buffer.

Your Action Plan to Deconstruct Cost of Goods Sold (COGS)

You don’t have to take control of everything overnight. Start with one step and reclaim the margin.

1. Demand a component-level quote

Ask for transparency—a detailed breakdown of product, packaging, manuals, and accessories. This will reveal the real markups.

2. Source packaging directly

The fastest win in China sourcing. Work with a dedicated packaging factory—better pricing, more customization, higher quality. Ship boxes to your main factory for final assembly.

3. Compare Ex Works (EXW) vs. Free on Board (FOB) costs

Request both quotes from your factory and compare with your freight forwarder’s EXW pickup rate. In most cases, managing it yourself is cheaper. For more strategies to protect your margins, see 3 cash-flow levers your Chinese factory hopes you never use.

4. Insist on Quality Control (QC) responsibility

Even if you supply components, your factory must remain responsible for final quality control (QC). Damaged packaging should be flagged, not used blindly. You can also explore how to turn customer returns into a proactive profit center as part of your quality and profitability strategy.

The Payoff: More Profit, More Control

Yes, unbundling adds complexity—but the savings and quality control benefits are worth it. This is how sophisticated, high-volume sellers operate.

By deconstructing your factory’s costly bundle, you stop paying for unnecessary markups and start pocketing the profit.

Unbundling your factory’s services can be a big shift—especially if you’re already juggling multiple suppliers, timelines, and product launches. At China Product Pros, we approach this as a structured process, helping brands keep it manageable while still capturing the benefits.

Some ways to keep it running smoothly include:

• Factory vetting & negotiation: Work with trusted suppliers for each component, and set clear expectations from the start.
  
• Direct component sourcing: Go to specialist factories to get competitive prices and avoid hidden markups.
  
• Freight & logistics management: Compare Ex Works (EXW) and Free on Board (FOB) to see which offers better total landed costs.
  
• On-the-ground quality control (QC): Inspect every component before final assembly to ensure it meets your standards.
  

Handled well, this approach delivers the cost savings and control of the aggregator playbook, while keeping day-to-day operations manageable.

Caveat: This step can normally be pursued for scaling, slightly later stage brands where focus can be shifted to profit optimization. For smaller brands, and especially small volume launches, it may not be practical. However, it is definitely something to keep in mind to return to.

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