The short answer: Print-on-demand (POD) usually has higher per-item costs compared to stocking locally, but it offers unique advantages that can make it cost-effective depending on your business model.
Main takeaways from this article:
- Print-on-demand:
- Higher costs per item.
- Offers flexibility and reduced upfront investment.
- Minimizes inventory risk.
- Local stocking:
- More cost-effective per unit.
- Requires careful inventory management.
- Involves higher upfront costs.
The best option depends on your business needs and long-term goals.
Understanding Print on Demand vs. Stocking Locally
When starting an e-commerce business, one of the many decisions you'll face is choosing between print-on-demand (POD) and stocking products locally. lets explore both options.
POD involves creating products individually and on demand after a customer places an order. This eliminates the need for pre-purchasing inventory but usually comes with higher per-item costs. Throw in the fact that they don't require minimum order quantity (MOQ) and can produce for just one quantity order, you can appreciate how they must charge slightly higher product costs at this quantity.
On the other hand, stocking locally means buying products in bulk, storing them, and managing all aspects of inventory, which can lower costs per item but comes with storage fees, risk of unsold inventory and the time and effort to verify the conditions of each product.
Deciding between the two options often comes down to costs. But which model is truly more affordable in the long run?
This article breaks down the cost factors of both POD and stocking locally to help e-commerce entrepreneurs, small business owners, and print-on-demand sellers make informed decisions tailored to their business needs.
If you want to know more about Print on demand check out this what is print on demand.
Cost Factors of Print on Demand
POD offers sellers a lot more flexibility in starting and running a business. However the cost structure may not appeal to everyone, let's over them to get an even understanding.
Setup Costs
Perhaps it's greatest advantage in terms of cost is the low upfront investment. With nearly every POD platform, you can start selling with just a design idea as they provide the tools to create your product and a platform for you to sell from.
Why it is low upfront costs? Because some may charge you a subscription fee. which gives access to lower cost price.
Product Costs
So with low quantities, POD product costs are higher than bulk ordered. Since each product is created individually, manufacturing expenses remain constant regardless of order volume.
However, you can find some that offer bulk discount which evens the playing field at higher quantities. At QPMN there is a FlexiBulk Savings program that even allows customer orders to be combined to qualify as a single high volume order, making it a unique and innovative approach to bulk discount with the limitation associated with traditional bulk discount programs.
Shipping Fees
The shipping fees are calculated based on where the POD manufacturing plant is. Typically they will charge you the standard shipping fee that the courier charges. Therefore the costs associated with shipping will depend where the plant is and your main customer base.
Hidden Costs
While POD eliminates the risk of unsold inventory, there are hidden costs to consider:
- Lower profit margins due to higher per-unit costs.
- Potential for longer production and shipping times, which may lead to customer dissatisfaction.
- Limited ability to customize packaging, which could impact branding efforts.
Despite these costs, the flexibility and ease of scaling make POD an excellent choice for entrepreneurs starting out or selling niche products.
Cost Factors of Local Stocking
Local stocking provides better control over inventory and costs, but this approach comes with its own financial challenges.
Bulk Purchasing Discounts
Buying in bulk significantly reduces the cost per item. For instance, ordering 500 T-shirts upfront can drop the cost per unit to as low as $5 or $6. This is ideal for businesses expecting consistent demand.
Storage and Fulfillment Costs
Local stocking requires physical space to store your inventory, whether at home, in a rented warehouse, or through a third-party logistics provider. Storage fees can add up, especially for larger products.
Example: Renting a small storage unit might cost $100 to $200 per month, while larger warehouse storage solutions can run upward of $500/month depending on location and size.
Risk of Unsold Inventory
One major drawback of stocking locally is the risk of unsold inventory. If demand doesn’t meet expectations, you might end up with hundreds of unsold items, tying up your capital and taking up storage space.
Example: Seasonal products like holiday-themed items can quickly become obsolete if not sold on time.
Insurance and Additional Overhead
If you plan to store high-value inventory, you’ll need to consider insurance costs for protection against theft or damage. Additionally, there could be other overhead expenses such as packaging supplies and labor for order fulfillment.
While local stocking requires a larger upfront investment, the potential for higher profit margins makes it a viable option for businesses with established demand.
Cost Comparison: Print-On-Demand vs. Local Stocking
| Cost Factor | Print-On-Demand | Local Stocking |
|---|---|---|
| Setup Costs | Minimal to none | High (bulk purchases required) |
| Per-Item Cost | Higher ($12–$15/shirt) | Lower ($5–$6/shirt) |
| Storage Costs | None | Required (may cost $100+/month) |
| Unsold Inventory Risk | None | Risk of overstocking |
| Shipping Fees | Higher (charged per order) | Variable (bulk shipping options) |
| Control Over Branding | Limited | Full control |
This table offers a snapshot of the major cost considerations when comparing POD with local stocking.
Scenarios for Choosing Print-On-Demand vs. Local Stocking
When deciding between POD and local stocking, it’s essential to consider your specific business needs. Here are some scenarios to help guide your choice.
Scenario 1: Small Orders and Niche Products
For small orders or niche products with unpredictable demand, POD is often the better choice. It minimizes risks and allows you to experiment with different product designs without committing to large inventory orders.
Example: A small business selling custom pet-themed merchandise could greatly benefit from POD.
Scenario 2: Large Orders and Mainstream Products
If your business has consistent demand and sells mainstream products, local stocking can lead to higher profit margins. Ordering in bulk reduces per-item costs and ensures faster delivery times to customers.
Example: A business selling plain white T-shirts for custom printing would benefit from lower costs via bulk stocking.
Scenario 3: Seasonal or Limited Edition Items
POD is ideal for seasonal or limited-edition items because there’s no risk of overstocking. You can easily discontinue products without financial loss.
Example: Holiday sweaters sold only during December can be produced on demand without needing storage afterward.
Which Approach Is Best for Your Business?
To decide between print-on-demand and local stocking, focus on your business priorities:
- Start-ups or niche sellers: Print-on-demand is flexible and low-risk, making it ideal for testing ideas or selling niche products with unpredictable demand.
- Businesses with consistent demand: Local stocking offers lower per-item costs and higher profit margins but requires a larger upfront investment.
- Hybrid approach: Some businesses combine both methods, using POD for creating test products and local stocking for their best-sellers.
By carefully analyzing your costs, product demand, and long-term goals, you can choose the best approach to optimize your e-commerce business!
How QPMN Supports Your Print-on-Demand Journey
At QPMN, we specialize in helping businesses seamlessly transition into the print-on-demand (POD) model. If you're looking to launch a product line without the risks of holding inventory, our platform provides the tools, resources, and expertise you need to succeed.
From streamlined product creation to efficient order management, we simplify every step of the POD process to help you focus on growing your business.
One of the standout features we offer is our unique FlexiBulk Savings program. Unlike traditional POD services, which often charge higher per-unit rates, our program allows you to save significantly on production costs as your order volume grows. This innovative pricing structure combines the flexibility of POD with the savings of bulk production, offering unbeatable value for businesses seeking scalability and affordability. Whether you're testing the waters with a single design or fulfilling a surge in demand, we ensure you always get the best possible price without committing to excessive stock.
Visit www.qpmarketnetwork.com to learn how QPMN can revolutionize your print-on-demand strategy and empower your business to thrive.
Contact Us
Contact us today to discuss your business with our Growth Manager. Let's grow together!