Cost Calculations selling low MOQ Pocket Fans

IELO Pocket Fan

This idea started in 2018 after my patent for a neck fan became void due to earlier patent (see the IELO project for more information about this) and I still wanted to use my brand to sell portable cooling devices. The idea behind this project was to redesign an already existing product from IMIPOW (see below pictures), improve it slightly and sell it under the IELO brand.

More vibrant colors

Products sold in mainland China tend to have more pastel tones rather than the more vibrant colors people tend to like in Western cultures. I decided to go withh three different colors for this product: Brink Pink, Jet Black and Snow White, targeting a more Western audience.

Costs and Profits

Hereunder a draft estimate on the costs for manufacturing this idea including storage in Hong Kong, planned sales prices, etc. This is a cost profit calculation for 1500pcs only, considering our limited budget and usual MOQ from suppliers. As you can see it hardly breaks even for small quantity orders unless you have budget to order much larger quantities (5000 or more pieces).

Storage

Space could be a serious cost consideration here in Hong Kong as space is expensive in a very densely populated city. Next to that, as sales will quite likely go through small channels (micro retail, small chains) selling only a few at a time, storage might be required for several months before we have sold all products (foreseen in cost profit calculation for two months). Fortunately there are some good options. Costs in HKD/month (roughly multiply by 1.25 for USD).

Shipping

Not investigated in calculations. However as quantity is low and it will be transported from China (south of China, close to Hong Kong) to Hong Kong I predict the costs for transport and customs will be relatively low.

Sales Channels

Sales will quite likely happen via micro-retail channels, not directly via bigger chains as they normally have all kind of requirements before you can work with them. That being said, it was still interesting to see which bigger retail stores would be a good fit for this product.

Conclusion

I decided not to continue with this project, simply because the costs hardly equal the profits for these small quantities and there was no funding for ordering higher quantities at the time (2018). I did not consider other routes, perhaps a Kickstarter or IndieGoGo could have made a difference but this product is not that special or innovative, so doubtful it would be successful.