Minimum Order Quantity (MOQ) is one of the most important decisions in apparel manufacturing. It determines the minimum number of garments that must be produced for a project to be economically viable.
MOQ is not only defined by factory constraints. It is also driven by unit economics, including cost per garment, selling price, and target profit.
What is MOQ?
MOQ (Minimum Order Quantity) is the smallest production volume required to recover fixed costs and achieve a desired level of profitability.
In practice, MOQ is determined by both economic and operational factors.
MOQ formula
This formula shows that MOQ depends primarily on margin per garment. When margin is low, MOQ increases significantly.
Margin per garment
Net revenue must consider discounts and fees:
This aligns with how real profitability is calculated in apparel businesses.
Example: MOQ calculation
- Cost per garment: $10.00
- Selling price: $22.00
- Discount: 10%
- Fees: 8%
- Freight-out: $1.50
- Fixed costs: $15,000
- Target profit: $5,000
In this scenario, the minimum order quantity is approximately 3,000 garments.
Operational constraints
Even if the economic MOQ is low, production may require a higher volume due to operational constraints.
- Minimum batch size
- Fabric minimums
- Cutting efficiency
- Line setup costs
Common MOQ mistakes
- Ignoring commercial deductions
- Using price instead of net revenue
- Underestimating fixed costs
- Ignoring freight-out
- Confusing break-even with MOQ
MOQ method used by the calculator
For a detailed explanation of how MOQ, margin, and production constraints are calculated, see the MOQ calculation method.
Calculate MOQ for your product
Use the MOQ Calculator to estimate minimum order quantity based on cost, price, profit target, and production constraints.