Minimum Order Quantity, Meaning And How To Calculate MOQ

Author: Jason Martin
Reviewed by: Ecommerce Operations Lead
Last updated: November 11, 2025

Executive TLDR

MOQ is the smallest production or purchase quantity a supplier will accept.
The right MOQ protects margin by balancing unit cost, cash tied in stock, and storage risk.
Calculate MOQ with a simple cost break even model, then sanity check against demand and cash.
For consumables, align MOQ with FEFO, lot size, and expiry so product stays fresh.
Start small, validate sales, then scale MOQ with real data.

Want help setting MOQs that protect margin — Talk to an Expert

What MOQ means in plain English
Why suppliers set MOQs
A simple way to calculate MOQ
How storage, cash, and risk change the answer
Special rules for dated products
How to negotiate MOQ without hurting quality
A 30 day plan to right size MOQs
Why Product Fulfillment Solutions
FAQ

What MOQ means in plain English

Minimum order quantity is the smallest number of units a supplier will make or sell per order. If you accept an MOQ that is too high, your money sits in inventory and your warehouse fills up. If MOQ is too low, your unit cost is high and you run out of stock. The goal is a quantity that keeps unit cost healthy without creating storage pain or expiry risk.

Why suppliers set MOQs

Production efficiency. Setups take time. Bigger batches lower unit cost.
Material purchasing. Raw materials are cheaper in bulk.
Quality control. Fewer, larger runs are easier to manage.
Cash protection. Suppliers want predictable orders.

Your job is to find the smallest quantity that still earns you a good unit cost while keeping cash free and stock fresh.

A simple way to calculate MOQ

You can use a basic break even model that balances fixed setup cost and the savings from a lower unit price at larger volumes.

Inputs

Setup or order cost per run: $S$
Unit cost at quantity $Q$ : $C (Q)$
Target gross margin per unit: $M$ dollars
Selling price per unit: $P$

Goal
Pick the smallest $Q$ that gives you margin after all costs and does not exceed what you can sell within your shelf life and storage plan.

Practical shortcut

Get quotes at two or three price breaks, for example 500, 1,000, 2,500 units.
Compute landed unit cost for each break:
$unit\text{Landed} = \text{Unit price} + \text{freight per unit} + \text{import duties per unit} + \text{expected storage cost per unit}$
Compute expected margin: $Margin=P−Landed\text{Margin} = P – \text{Landed}$ .
Choose the smallest break where margin meets your floor and inventory will turn before it expires.

Mini example

Quote A: 500 units at 6.20 each
Quote B: 1,000 units at 5.60 each
Freight adds 0.30 per unit at either volume
Storage and handling adds 0.10 per unit for the period you expect to hold
Selling price is 12.00

Landed unit cost:

500 units: 6.20 + 0.30 + 0.10 = 6.60
1,000 units: 5.60 + 0.30 + 0.10 = 6.00

Margin:

500 units: 12.00 − 6.60 = 5.40
1,000 units: 12.00 − 6.00 = 6.00

If you can sell 1,000 units before expiry and without storage strain, MOQ of 1,000 makes sense. If demand is unproven, start at 500, validate, then scale.

How storage, cash, and risk change the answer

Storage and handling
Bigger MOQs can raise storage cost or force overflow space. If you need flexible capacity, review warehousing and storage solutions.

Cash tied in stock
Large MOQs lock cash. Track weeks on hand and reorder before you drop below your lead time plus safety.

Operational impact
High piles create rehandling and damage. Keep cartons labeled and visible, with large bin IDs and clean locations under real time information.

Shipping cost
Right size packaging at pick and pack. Use a posted packaging matrix to avoid DIM creep and protect margin. See pick and pack services and discounted shipping rates.

Special rules for dated products

If you sell supplements, vitamins, or cosmetics:

Match MOQ to lot size and expiry so stock sells well before the date.
Capture lot and expiry at receiving and enforce FEFO at pick.
If MOQ forces too much stock, create smaller kitting bundles or variety packs to move product without discounting. See kitting assembly services and health and wellness fulfillment services.

How to negotiate MOQ without hurting quality

Share demand truth. Provide rolling forecasts so your supplier can plan smaller, more frequent runs.
Offer a pilot. Pay a slightly higher unit price on the first run in exchange for a lower MOQ.
Buy materials once, produce in waves. Suppliers can purchase raw materials in bulk while producing in smaller finished batches.
Lock labeling and packaging rules. Clear specs reduce rework so suppliers accept lower MOQs.
Improve receiving. Promise clean ASNs and booked docks so receiving is fast and predictable. Target 1 to 3 day dock to stock.

A 30 day plan to right size MOQs

Week 1 — Get the facts

Pull 90 days of sales per SKU and compute weeks on hand.
List supplier breaks and current MOQ by SKU.
Capture shelf life and lot size for dated items.

Week 2 — Build options

Create landed unit cost at each break.
Add storage and handling per unit for expected hold time.
Identify SKUs where MOQ exceeds 8 to 12 weeks of demand or shelf life.

Week 3 — Negotiate and test

Ask for a pilot MOQ at a mid tier price.
Split raw purchase from finished batches if needed.
If demand is unproven, launch with 1 or 2 variants and keep bundles ready.

Week 4 — Implement and monitor

Place the first right sized order.
Track sell through, weeks on hand, and margin.
Adjust reorder points and safety stock.

Why Product Fulfillment Solutions

Central U.S. hub in Cincinnati for national 1 to 3 day ground coverage.
Barcode first receiving aligned to accurate ASNs for predictable dock to stock speed.
FEFO and lot or expiry controls built for consumables.
Kitting and assembly to move inventory in smart bundles.
Pick and pack standards with right size packaging and a second scan at pack.
Small parcel optimization that rate shops every label.

Talk to an Expert

FAQ

What is MOQ in simple terms
The smallest number of units a supplier will let you order in one batch.

How do I decide on a good MOQ
Compare landed unit cost at price breaks to your selling price, then pick the smallest break that meets margin and will sell before it expires.

What if my supplier’s MOQ is too high
Negotiate a pilot run, split raw purchase from finished batches, or launch fewer variants. Use bundles to move inventory.

How does MOQ affect shipping and storage
Higher MOQs tie cash and take space. Use right size packaging and rate shop every label to keep cost per order in check.

How do I handle MOQs for dated goods
Align MOQ with lot size and shelf life. Enforce FEFO at pick and track expiry at receiving.