Uh-Oh: "What's Your Target Costs?"

Hey There,

(Delilah, what’s it like in New York City…)

Starbucks is a scam!

Yesterday was the first day of school and we took our kids to get some cake pops when school let out.

I also bought a venti iced coffee.

The total was $17 and some change! Yes, I have a big family.

Thankfully I had 400 points on the app and got the 4 cake pops for free.

Since we’re talking copacker costs today, let’s jump in.

The Big Question: What’s Your Target Cost?

You’re in the middle of a conversation with a copacker. They hit you with the big question: “What’s your target cost?” Your heart skips a beat. What do you do?

1. Don’t Share Your Target Cost ❌

Nope. Not this one. Keeping your cards close to your chest might seem like a smart move, but it’s a roadblock in the world of contract manufacturing. Trust is key, and this approach doesn’t build it.

2. Share an Unrealistically Low Cost ❌

This is a no-go too. Throwing out a number that’s way too low might seem like a clever negotiation tactic, but it’s a dead-end street. It’s not authentic, and it won’t get you far with experienced copackers.

3. Provide a Target Cost Based on Real Factors ✅

Bingo! This is where the magic happens. Break down your costs for ingredients, packaging, and shipping. Be transparent. Say something like:

“Look, I don’t know what your markup is going to be, but my cost for ingredients, packaging, and shipping have been $X. Assuming your markup is reasonable, we can do business.”

Added bonus: ask for their turn-key cost vs. their tolling cost. It’s a conversation, not a battle.

Why Share Target Costs with Contract Manufacturers?

Sharing target costs isn’t just about numbers; it’s about building a relationship. Here’s why it works:

1. Building Trust

Trust is a two-way street. Share more, get more. It’s that simple. Once you start opening up, you’ll find that others will too.

2. Saving Time

Cut the back-and-forth. Get to the point. Sharing target costs removes friction and speeds up the process. Time is money, after all.

3. Showing You Know Your Stuff

You’ve done your homework. You know the consumer packaged goods industry. Sharing target costs proves that. It tells the copacker that you mean business.

Don’t Be Afraid to Share Your Target Costs

Sharing target costs with copackers isn’t just a good idea; it’s the right move. It builds trust, saves time, and shows you know what you’re talking about.

So don’t be shy. The world won’t end. If you don’t know your target costs, start there before even approaching a copacker in the food and beverage sector.

The Best Copacker Directory

Have you heard of it? I’m building Comanufactured publicly. Embarrassing myself along the way as I’m learning how to monetize this and build a website.

Follow along on LinkedIn to watch me fail! I provide weekly updates.

…but hopefully, I succeed!

-Josh

Your Copacker Curator & Strategist