The pitch sounds good. Run 50,000 units per flavor instead of 5,000 and your co-packing rate drops from $0.36 per unit to $0.18. That’s half. Across three flavors and 150,000 units, you’re saving $27,000. The math is right there. How do you say no to $27,000?
You say no by running a different set of numbers. The ones the co-packer doesn’t show you.
The Run That Saves You $27,000
Let’s use real numbers. Your ingredients cost $0.60 per unit. Film costs $0.08. Co-packing at 50,000 units per flavor costs $0.18. Three flavors, 150,000 units total. Your total production cost is $129,000.
At 5,000 units per flavor, co-packing is $0.36 per unit. Three flavors, 15,000 units. Total production cost is $15,600.
The per-unit savings at 50,000: $0.18. The dollar savings across the full run: $27,000. The co-packer is right. The math checks out.
The Numbers They Don’t Show You
Storage: 150,000 sachets is roughly 8 pallets. At $45 per pallet per month, you’re spending $360 a month just keeping that inventory somewhere while you figure out whether it sells. Over 12 months: $4,320. If your 3PL charges more, double it.
Capital cost: You put $129,000 into inventory instead of $15,600. That’s $113,400 that isn’t available for marketing, for a second formula, for anything else. If you borrowed it at 8% interest, that’s over $9,000 a year just to carry the debt.
The pivot cost: Something will need to change before all 150,000 units sell. It always does. A label update. A Prop 65 warning. A formula tweak because an ingredient is backordered. Whatever it is — your 150,000 units of existing inventory are now either a rework cost or a write-off. At $0.86 fully-loaded cost per unit, that’s up to $129,000 of stranded inventory.
| Cost | 5k / flavor | 50k / flavor |
|---|---|---|
| Production (3 flavors) | $15,600 | $129,000 |
| Storage, 12 months | $2,400 | $9,600 |
| 3PL receiving | $600 | $600 |
| Interest (8% if borrowed) | $1,248 | $10,320 |
| Total at risk | $19,848 | $149,520 |
The real number
The co-packing “savings” at 50,000 units is $27,000. Your additional exposure is over $129,000. That is not a deal. That is a trap with a bow on it.
What Actually Kills Brands
I’ve been through this. Our first production run was 75,000 units per flavor. We were in for $250,000 before we’d proven the product could survive transit, before we knew our real sell-through rate. We lost most of it. The co-packer got paid. We didn’t.
The brands that die from oversized first runs don’t die because their product was bad. They die because they bet $129,000 on the assumption that 150,000 units would sell before they’d proven 1,500 would. The co-packer is incentivized to push you toward larger runs. Their economics are better. Yours are worse.
The Smart First Run
Run 5,000 units per flavor. Sell them. Learn what your customer actually wants. Find out what your real velocity is. Find out if anything needs to change. Then run more.
At North Lakes, a run of up to 8,000 units across your SKUs is $2,750 flat. You’re out less than $20,000 fully loaded. If it works, you scale it. If something needs to change, you change it without a $100,000 write-off hanging over the decision.
Screwing up 5,000 units is expensive. Screwing up 50,000 units is catastrophic. I know because I did the second one. Run the math. — Ole
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