What Is MOQ (Minimum Order Quantity)?
MOQ is the minimum amount a supplier will sell in one order. Understanding it helps you manage cash flow and avoid over-stocking.
Key Takeaways
- MOQ is the minimum quantity a supplier requires per order.
- High MOQs tie up cash in inventory and increase stockout/overstock risk.
- MOQs are often negotiable — especially once you have an established relationship.
What MOQ is
Minimum Order Quantity is the smallest number of units a supplier will produce or sell in a single order. A factory might set MOQ at 500 units because smaller runs are uneconomical on their equipment. A wholesaler might set MOQ at £500 in value. MOQs exist to ensure suppliers cover their fixed costs on each production run or order.
The MOQ dilemma for SMEs
High MOQs force you to buy more than you need, tying up working capital in slow-moving stock and increasing the risk of over-ordering. If a supplier's MOQ is 1,000 units and you only sell 100 per month, you're buying 10 months of stock upfront — a significant cash commitment for an untested or seasonal product.
Negotiating MOQs
MOQs are often negotiable, especially for new product launches or new supplier relationships. Strategies include: committing to a higher total annual volume in exchange for lower per-order MOQs; offering a higher unit price for a lower MOQ; sharing MOQ with another buyer (less common); starting with one SKU at MOQ to build the relationship before diversifying. Always ask — the worst a supplier can say is no.
MOQ and inventory strategy
Account for MOQ when modelling your cash flow and inventory. If MOQ forces six months of stock upfront, you need working capital to fund that. If the product fails, you have unsellable inventory. Factor this risk into the business case when evaluating new products — the landed cost calculation isn't just about unit economics, it's also about the cash burden of minimum orders.