5 Ways to Minimize Production Costs

Let’s suppose you have started a small business, for instance making your own handmade products. You started it as a hobby but now you’re starting to make some profit that helps you with your everyday expenses, or maybe your hobby has even become your main source of income. In any event, if you’re using online platforms like Etsy to sell your products, your potential buyers come from all over the world, but so does your competition. And you might have a good quality product, but you’re not the only one, so it seems that a good way to become even more competitive is to lower your prices just a little bit. But then you might not be able to cover your basic production costs, let alone make profit. So, are there ways to cut your expenses in a manner that won’t affect your product? There might be a few.

Cheaper materials

Going for cheaper options doesn’t necessarily mean that your product will lose its appeal or quality. You might be used to working with a certain kind of material and you might be convinced that nothing can do the job better for you. But thanks to constant technological innovations, finer and cheaper materials are continually hitting the market and a little bit of research on what else you could use won’t do any harm to your business. Also, prices on the market tend to change depending on a large number of factors, so you should always be aware of your options and if the right moment comes, switch to a cheaper yet equally suitable option.

Just-in-time production

Just-in-time (JIT) is a specific business approach which basically means that you should keep your expenses at the bare minimum needed for your business to function. This, in turn, means that you shouldn’t buy as much supplies as you can, but only as much as you need at a certain moment. Along these lines, try to avoid investing resources in manufacturing products that are not about to be sold immediately nor in large quantity of raw material needed for such products. Adapt only to the most urgent demands of your business and don’t waste resources on the things that you can only sell in the distant future. This will admittedly make the process of supplying your shop more hectic and complicated, but it will undoubtedly save you some valuable money and space.


You have to be aware that just like you, your suppliers also have fierce competition, especially if you buy goods online. Your supplier might be pleasant and reliable, but they may not be the best one around. Try to negotiate prices even if they are fixed and try to go for better deals if you have a long-term partnership with the supplier. Ask around about other possible solutions, google them and be constantly up-to-date with potential new suppliers and partners.

Cut down shipping expenses

Naturally, your customers will be most eager to buy your product if you offer free shipping. But if you can’t afford it, you could try similar strategies that will save you money and encourage potential buyers at the same time, like offering free shipping only to regular customers or those who spend a certain large amount of money on your products. But this is not where cutting down shipping expenses stops. For instance, you need to label your packages – you’ll need shipping labels, address labels, stamps, and you might even want to attach a detailed description of your product to the package. Buying a labeling machine could be a good idea in this case, and some of them, like the Dymo LabelWriter 450 Duo don’t even need ink or toner, so you’ll be spared any additional expenses.

Cut down on packaging expenses

Packaging costs might not seem like a major expense, but if you calculate how much you spend on packaging on a monthly or yearly basis, you might change your mind. In short, the trick to save some money is to buy a big quantity of packaging material and get entitled to some kind of a discount. For instance, you can get good discounts from online suppliers like Uline or Value Mailers. Furthermore, if they fit, you can recycle and reuse the packaging from the supplies you bought yourself, thus saving some more money and time.

It’s important to keep in mind that these are just a few hints on how to slightly cut your production costs and make your product just a bit more competitive. But to truly minimize the expenses of your business you have to work on your general mindset. If you want your expense-cutting efforts to genuinely make a difference, you’ll have to constantly look for opportunities to reduce your spending and to try to optimize your business all the time at every step.