How to break down the quotation for cosmetics OEM?

1. First divide the total cost into eight baskets

It is recommended to split the quotation into eight categories: formula content, direct packaging materials, outer packaging, decoration technology, development and testing, production and assembly, loss taxes and delivery logistics. Any "all-inclusive price" should be able to return to these items, otherwise it will be difficult to determine the reason for the increase later.

• Contents: raw materials, essence, toner, pure water, losses
• Direct packaging materials: bottles, cans, pumps, nozzles, caps, inner plugs, hoses
• Outer packaging: label, color box, gift box, inner holder, instructions, outer box
• Process: silk screen, hot stamping, spray coating, electroplating, labeling, inkjet coding
• Development: proofing, color mixing, fragrance mixing, mold opening, cutting and printing fees
• Quality & Compliance: Inspection, stability, compatibility, third-party testing and documentation
• Manufacturing: Weighing, formulating, filling, assembling, cartoning and crating
• Transaction and delivery: taxes, warehousing, domestic transportation, customs clearance and international logistics

2. The formula cost is not calculated based on the quantity of popular ingredients.

Content costs depend on raw material specifications, suppliers, effective addition amounts, formula structure, production losses and minimum purchase quantities. Having ten popular ingredients written on the package at the same time does not mean that each one is added in the same specification or effective level; on the contrary, certain high-quality base oils, surfactants, flavors or preservative systems may affect the cost more than the advertised ingredients.

When comparing prices, you can request the desensitized BOM caliber: raw material category, key raw material specifications, target addition range, cost per kilogram of content, net content per bottle and theoretical loss. There is no need to ask for other customer recipes to determine the quotation logic.

3. The cost of packaging materials is often higher than the contents

Thick-bottomed glass bottles, vacuum pumps, metallic lids, magnetic gift boxes and complicated inner trays can quickly drive up costs. Packaging materials also have molds, color minimum order quantities, spraying yields, printing starts and damage losses. Universal off-the-shelf bottles and exclusive molded bottles cannot be placed in the same column for direct comparison.

Compatibility must be considered for packaging materials that come into direct contact with the contents. Stability studies show that packaging materials may affect product composition and appearance, so sealing, dispensing and compatibility need to be re-evaluated before replacing bottles at a lower price.

• Bottle material and weight
• Pump head structure, single discharge volume and rebound
• Lid weight, inner plug and sealing ring
• Color, surface treatment and allowable color differences
• Color box paper, structure, inner support and transportation protection

4. Sampling, testing and regulatory fees should be distinguished between one-time and per-batch costs.

Sampling, mold opening, design and partial testing are one-time or low-frequency expenses in the development stage; raw material inspection, semi-finished product inspection, finished product inspection and batch release will occur with the batch. Efficacy evaluation, safety assessment, filing notification and target market responsible person services also depend on the product type and country of sale.

The quotation should clearly state which costs are included, which ones will be settled according to actual conditions, and who will bear the responsibility for failed redoing. Don’t understand “free proofing” to mean that all modifications, express delivery, packaging material samples and testing are free.

5. Why production losses must be included in the quotation

Preparation, transfer, filtration, filling, spraying, screen printing, assembly and transportation will all cause reasonable losses. High viscosity, small filling volumes, odd-shaped bottles, complex spraying and gift box assembly usually result in higher losses.

The contract should stipulate the loss of contents, loss of packaging materials, replenishment method, liability for excess loss and ownership of remaining materials. Simply writing “actual billing” prevents brands from estimating final costs.

6. Ladder quotations must use the same specifications

It is recommended to compare at least 5000, 10000, 30000 or three orders of magnitude applicable to the project, and ensure that the formula, capacity, bottle, color, printing, color box, inspection and delivery location are completely consistent. The decline after the volume increase is mainly due to procurement, start-up and fixed cost amortization. Not all costs will decrease year-on-year.

At the same time, it is required to indicate the currency, exchange rate base, tax included or not, trade terms and quotation validity period. For cross-border projects, if you only give the FOB price but compare it with another DDP price, it will lead to wrong conclusions.

7. Taxes, fees and logistics cannot be left to the end.

For domestic projects, it is necessary to confirm whether the quotation includes value-added tax, invoicing tax rate and delivery scope; for export projects, it is necessary to confirm who is responsible for trailering, customs declaration, shipping, insurance, destination port and import taxes under trade conditions such as EXW, FOB, CIF or DDP.

Perfume, alcohol-based sprays, aerosols and some special packaging materials may have transportation restrictions, and logistics solutions will affect packaging, documentation, cycle time and cost. You should check with the freight forwarder before confirming the product structure, rather than looking for a transportation method after the finished product is completed.

8. Create a price comparison list using anonymous quotation samples

Assume that Plan A is a mature hydrating essence, 100ml off-the-shelf pump bottle, single-color silk screen printing and ordinary color box; Plan B is an exclusive formula, thick-walled glass bottle, spray stamping and magnetic gift box. Even if both are called "100ml essence", the contents, bottle, decoration, packaging, testing and delivery must be listed separately.

It is recommended that each supplier's quotation be entered into a unified form: specifications, quantity, unit price including tax, mold fee, proofing fee, testing fee, loss, packaging method, delivery date, payment and quotation validity period. Low-ball quotes that fail to fill in key fields are not comparable.

9. The ten most easily hidden cost items

The following items are often missing from initial verbal quotes and should be inquired about individually before confirmation.

• Bottle molds and trial molds
• Spray paint palettes and swatches
• Silk screen version, hot stamping version and knife version
• Label barcoding and inkjet coding
• Packaging material samples and international express delivery
• Third-party testing and regulatory translation
• Production surplus materials and minimum settlement quantity
• Pallets, corner guards, marks and reinforcements
• Warehousing overdue fees
• Returns, rework and replenishment logistics

10. Correct order of quotation review

First determine whether the specifications are consistent, then determine whether the supplier can produce legally, then compare the quality standards and delivery boundaries, and finally compare the total arrival cost. The cheapest solution but with mismatched licenses, incomplete information, or unverified packaging materials may shift costs to rework, delays, and risks of removal from shelves.

Price negotiations should revolve around adjustable variables: reduction SKU, use spot packaging materials, combine printing colors, reduce the complexity of gift boxes, increase single purchase volume or extend delivery time, instead of asking for unfounded price reductions under unchanged specifications.