Many businesses in the service market can often have difficulty keeping profits up through their services alone. That’s why many service companies have opted to selling industry-related retail products to their clients as a form of supplemental income. Rather than stocking brand named products, many companies have looked into creating their own brand to market to their client. There are two methods by which a business can have these brands manufactured; contract manufacturing and private labeling. But what exactly is the difference between the two?
For this explanation, we will use the example of a salon looking to invest into it’s own personal brand of professional skin care line.
Private label suppliers offer their clients a catalogue of finished products that a company can put their own packaging design on. Let’s say, for example, a salon wanted to sell it’s own line of skin products as a way to compete with other brand name products. The owner would then look into private label skin care for spas, and pick out the products they want to offer. Once the products have been chosen, the private label skin care manufacturers will create a line of products for that spa, packaging them in personalized containers with the company’s brand name. The spa is then able to sell these products to their clients under their own name, which results in an increase of profit.
Contract manufacturing is a very similar process to private labeling. Companies are given a catalog of basic products, for which they can choose from. However, contract manufacturing companies allow their clients to add or take away any ingredients in the formula of their products. For example, spa owners may want their own line of products that utilizes the scent of a popular local flower. They would then contact a contract manufacturing company, asking them to mix a special batch with their extra ingredient. The contract manufacturer would then create the product, put it in a personalized packaging, and send it to the spa.
Be it through private labeling, or contract manufacturing, creating your own brand can be a great way to get a little extra money for your business.