One of the most common mistakes new dietary supplement brands make is to produce too large a first batch. It seems that a larger batch means a lower cost per unit and a higher potential profit. In practice, this very often ends up with money frozen in stock, liquidity problems and downward pressure on price.
The first production run should not be a maximum. It should be strategically thought through.
The first production is a test of the market, not a target scale
The most important assumption with your first product is very simple - you don't yet know how fast it will sell. You may have good predictions, but the market will still verify everything.
Therefore, the first production should answer several questions:
- whether the product sells
- how fast it rotates
- what is the real selling price
- how much does it cost to acquire a customer
- whether customers return for another pack
Only after the first series do you have real business data.
Too much production blocks development
Producing a very large batch to start with may look good in Excel, but in reality often causes problems:
- money is frozen in goods
- lack of marketing budget
- the warehouse is full of one product
- the brand does not have the resources for new products
- there is pressure for promotions and price reductions
In effect, the company has a product but no money to sell it.
Better strategy - smaller series, faster rotation
A much safer model is:
- smaller first production
- sales check
- rapid second production
- gradual increase in scale
Such a model allows:
- reduce the risk
- maintain liquidity
- react faster to the market
- develop further products
In practice, most stable brands develop in just this way, rather than through one huge production to boot.
How much should the first production be
There is no one number that is good for everyone, but the first series should correspond to sales for a few months, not a few years.
Most often, the first production should cover:
- 2-4 months of sales under realistic assumptions
- the marketing budget should be similar to the production budget
- the brand should have the resources for another series
If all the money goes into production and there is nothing left for sales and marketing, then the strategy is flawed.
Production versus marketing - the budget ratio
A very common mistake for new brands looks like this:
- 90% budget goes into production
- 10% budget goes into marketing
And it should be the other way around, or at least similar proportions. A product without marketing won't sell, but marketing without a product doesn't make sense either. The two must be planned together.
In projects at Pharma Dot, it is often seen that brands that plan a budget for both production and marketing from the beginning grow much faster than those that invest everything in the first run.
Thinking in series, not one production
The best approach to supplement production is to think in series:
- test series
- series after first sales results
- series when scaling up sales
- larger series with stable product
Such a model allows you to control the risks and develop the brand gradually, rather than putting everything on one card.
The warehouse also costs money
Many people forget that storing products also generates costs:
- storage space
- logistics service
- control of batches and expiry dates
- frozen capital
Product sold earns money. Product standing in stock blocks money.
Summary
The first production run of a supplement should be a strategic decision, not an attempt to lower the cost per unit as much as possible. Far more important than the lowest production price is maintaining liquidity, the ability to invest in marketing and flexibility in brand development.
Brands that plan to produce in batches and develop gradually grow more steadily and are much less likely to run into financial problems at the start of operations.
