When sourcing, we don’t make the mistake of just choosing the lowest priced factory.

It could come back to bite us.

Are you sourcing from China? 

Read on for a checklist of items to watch for.

In Chinese there’s an expression: 一分钱一分货.

Or “You get what you pay for” in English.

Indeed, the lowest price doesn’t always equal the best outcome.

There’s so much more to it.

Here are 10 other considerations:

1. Communication ability

2. Level of cooperation

3. Location

4. Lead time

5. Terms

6. Quality standards

7. Are they a factory or trade company?

8. Intellectual property protection

9. Experience and expertise

10. Scalability

Let’s break these down one by one.

1. Communication ability:

Nobody likes chasing someone for answers or getting partial replies.

Worse, getting far into the production process and learning your product is off spec.

2. Level of cooperation:

This refers to how flexible and willing a factory is to collaborate on developing and improving your product.

3. Location:

Our great price may not look so great once we start paying more in freight because our factory is in the boonies.

4. Lead time:

Slow lead times tie up cash and make us less flexible.

And make us slower to market and slower to replenish when sales take off.

5. Terms:

Cash flow is huge.

Sometimes a 20% down deposit makes a big difference compared to a lower cost and, say, 30% down.

Know what’s important to you and do the math.

6. Quality standards

If you’ve been selling for any amount of time then you know the pain of quality issues.

Vet this point early on to save a ton later.

7. Are they a factory or trade company?

Sometimes working with a trade company makes sense.

Other times you may be paying a big markup and suffering from unclear communication as your feedback and requests get filtered through this middleman.

8. Intellectual property protection

We like working with factories who value and respect our unique designs.

Check out my post history for notes on how we approach this.

9. Experience and expertise

We try not to be the factory’s guinea pig as they learn how to make our product.

They must know our product area well and have the necessary raw material purchasing connections.

10. Scalability

It’s just not going to work if factory A has a great price but can only churn out 2,000 units a month when we need at least 5,000.

Sometimes—scratch that—oftentimes we can’t check off every box.

Find the Best Fit For You

So we evaluate. And make a list of what’s the most important.

Then we go to work, finding, carefully vetting and thoroughly communicating with potential factory partners.

A much better outcome makes the process very much worth it.

How about you? What do you look for when researching new factories?