Should I share molding tools with a supplier to save on costs?
I am thinking of developing the molds of the two products, the factory I have been buying from is also interested in developing the molds of the same products.
The factory owner asked me to share the cost of the molds with him and say that we share the molds together and say that each of us sells the products at the same price in the market.
I am a little hesitant to do it. What would you suggest?
The two molds cost about 11,765 USD, a bit expensive for me to invest all by myself. But one of my clients might buy 2,000 pcs of each for the two products I am thinking of developing. That means the business profit will pay half of the molds fee if the client truly places the order with me. And I will get to keep the molds for producing for other clients.
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Feb 28, 2020
If the only upside to sharing the molds is a reduced initial cost then I would not recommend doing it, especially if you can cover the cost yourself. Once the factory has the molds if they decide to mass-produce the items they will be able to undercut your costs and price. Also flooding the market would lower the value of the product. if you control the molds you control scarcity and price.
Thanks, it has a very good point. I think I am going to invest the molds by myself to dominate the market.
The factory is one of my main suppliers, what I could say to him to reject the factory owner's mold sharing request but does not hurt our relationship?