MOQ

Sometimes, wholesalers and manufacturers may require a minimum order amount (MOQ) to place an order. Producers, suppliers, or distributors might reject clients who cannot identify the minimum order volume.

Even though it seems contradictory that refusing orders might increase earnings, understanding how minimum order quantities work and why some suppliers may employ them is critical, especially for highly customized or low-margin industries. Minimizing order amounts can improve your bottom line if they’re used well.

Chapter 1: What is the Minimum Order Quantity (MOQ)

Search engine optimization MOQ

A minimum order amount (MOQ) may be required when placing an order with manufacturers or wholesalers. Manufacturers, suppliers, or wholesalers may ask for a minimum order amount (MOQ). The customer will be turned away if they don’t meet that requirement.

Although it might seem counterintuitive for businesses to turn away, higher profits can be achieved by understanding how minimum order quantities work and why some suppliers may choose to use them, especially in high-margin, highly customized businesses. You can improve your bottom line by ensuring minimum order quantities are managed carefully.

Minimum order quantity (MOQ) is the minimum number of units a company wants to sell to customers simultaneously. Although a manufacturer/supplier usually uses it in a production run or a merchant context, minimum order quantity can also be used for different orders.

A couple of examples:

  • An MOQ for a supplier can be 1000 units. That means you can purchase no less than 1,000 units of inventory at one time.
  • The MOQ requirement of a brand for wholesale or retail partnerships may be similar. They might require at least 50 units, or $500 worth, of product to purchase together.

MOQs are an indication of the economic constraints faced by suppliers when processing orders. These include costs for materials, machinery, and shipping costs. They can also be administrative, like bookkeeping or billing.

Simple MOQs refer to MOQs having one lower limit. It can be a dollar amount or a number, also known as “reaches.” Complex MOQs are defined as those with multiple limitations. They may contain minimal parts or materials, dollar amou