Private Label Manufacture Vs. Product Development Laboratory
How to choose between using a Private Label Manufacture or a Product Development Laboratory to develop your new product
Private Label Maufacture
Private label manufacturers are contract manufacturing organizations (CMO’s) that will put a company’s label on a pre-designed off the shelf product. These products are generally not customized to the individual client as many private label manufacturers will make little to no modifications to the existing formulations that they offer.
The advantage of going the private label route is that it generally has a lower start-up cost as the R&D stage of the product development process is primarily bypassed. However to create the initial formulation choices, the CMO had to initially spend its own time and resources by either developing them in-house or by hiring an independent formulation laboratory to create them on their behalf. This cost is then transferred to their customer by charging a higher cost-per-unit than if they would gone to a manufacturer with their own pre-developed formulation.
Many clients of these organizations do not realize this added cost up front and switching to another manufacturer later to save money on their production costs can be complicated. This is because the manufacturer simply puts a company’s private label on the CMO’s staple formulation. As the formulation belongs to the manufacturer, they can withhold its exact ingredients, the quantities of these ingredients, and the recipe or manufacturing process required to produce the product. Without this necessary information it makes it harder for a company to switch to using another manufacturer, which essentially eliminates the need to maintain competitive prices on the products that they produce.
While the products formulation can be deformulated and reformulated at a later time by a specialized analytical laboratory in order to gain the necessary information needed to switch the production of a product to a manufacturer of choice, it makes sense for many to instead spend these funds up front to have a custom formulation developed instead.
The private label route is good for those that are not looking to acquire a unique or customized product to sell. They are often individuals who are looking to resell a single product or small product line that has their label on it to a few friends or colleges. For example, these individuals may know that they want to sell a lipstick line, and they would like a few generic colors to choose from. But they don’t have any specific product specifications that they would like met and having a custom formulation developed on their behalf is outside of their budget.
Custom Formulation Laboratory
A custom formulation laboratory is a chemical lab that specializes in developing a commercial or industrial product that is tailored to a company’s unique specifications. Some of these laboratories will focus on a specific type of product and others will develop products for a wide range of industries.
These laboratories will work with their clients to understand the unique aspects that they are looking for in the product such as colors, look, viscosity, feel, and other performance specifications that clients would like their formulation to have. Then they will conduct research of the latest techniques and technologies available to use in that type of product and create several variations or prototypes that the client can review. Using the customer’s feedback, the skilled formulation chemists will then finalize the product’s formulation. Once finalized, the client’s team of chemists delivers the rights to the formulation, a complete list of ingredients used, the exact quantities of the ingredients, and the production process used to develop the product. They can then take this data and have it produced by the CMO or blender that gives them the best pricing options.
Other advantages to using the right custom formulation laboratory is that some are truly full services and can take an initial idea from its concept to an on the shelf product. This can include services such as; regulatory consulting, testing of raw materials, determining the products shelf life, verifying its safety, and performing a detailed competitor product analysis that’s data can be invaluable to a marketing team. They can also develop and validate methods to test the product over time to ensure that its quality and performance remains consistent from batch-to-batch. Some of these laboratories can even assisting in obtaining a patent for a new product’s formulation or development process and can provide litigation support services down the line if needed.
Often times these laboratories also have contacts and partnerships within the industries they serve. This means that they can often help locate a raw material supplier, a packaging supplier, and a product blender to produce the product.
While it can take more time to develop a custom formulation and there can be higher startup costs involved with this route, many companies and entrepreneurs often choose to do this for several reasons. Generally the cost per unit developed is less as their product’s manufacturer knows they have to be competitive in their pricing in order to earn and keep business. In addition the final product is a unique and often innovative product and the company, not the manufacturer, will own the full rights to the formulation.
Avomeen Analytical Services is an independent chemical testing laboratory that works with both companies and entrepreneurs. Our skilled chemists can develop brand new and innovative formulations on a company’s behalf and all of the results we produce are 100% owned by our clients.
Our Independent Laboratory’s Specialties Include:
- Custom Formulation Development Services
- Deformulation & Reformulation
- Product Failure & Defect Analysis
- Unknown Material & Contamination Identification
- Raw Material Analysis
- Competitor Product Analysis
- Stability & Shelf Life Testing
- Method Development & Validation
- Litigation Support Services
- Full Services Testing Laboratory
Our chemists serve clients nationwide with a wide range of specialized services. They are available to both during a project and once it’s complete. Our testing laboratory is FDA-Registered, DEA-Licensed, and cGMP-Compliant.
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Industries we serve include:
- Pharmaceuticals, Neutraceuticals & Supplements
- Commercial & Industrial Cleaners
- Organic & Inorganic Materials
- Packaging & Food Containers
- Pesticides & Fertilizers
- Adhesives & Sealants
- Plastics & Polymers
- Paints & Coatings
- Food & Beverages
- Medical Devices
- Inks & Dyes
- Imported Goods
- Cosmetics & Skin Care
- Rubbers & Latex
- Raw Materials