5 Mistakes to Avoid When Working With Co-Packers

Working with a co-packer can be a game-changer for scaling your brand, but if you’re not careful, it can also become a source of unexpected headaches. Many entrepreneurs jump into partnerships with high expectations, only to find themselves dealing with hidden costs, miscommunications, and operational roadblocks.

To help you navigate the process, here are five common mistakes to avoid when working with a co-packer.

Table of Contents

• 1. Not Setting Proper Expectations From the Start
• 2. Not Understanding Pricing and Hidden Fees
• 3. Not Clarifying Ownership of the Formula
• 4. Not Planning for When Things Go Wrong
• 5. Not Exploring Price Breaks and Cost Drivers
• Key Takeaways

1. Not Setting Proper Expectations From the Start

The excitement of launching a new product can sometimes cloud the reality of what it takes to get a co-packing project up and running. Without clear expectations, both you and your co-packer may run into misunderstandings that can slow down production or derail your timeline entirely.

Before committing, ensure you fully understand the steps involved in bringing your product to market. Ask yourself:

• What are the key hurdles we need to overcome?
• Are there compliance tests or certifications required?
• Do we need to source any special ingredients or materials?
• How long will production take, and what are the lead times?

2. Not Understanding Pricing and Hidden Fees

Pricing with co-packers is rarely as straightforward as it seems. Many brands assume the quoted cost is "all-in," only to be blindsided by unexpected fees later. Before signing any agreement, ask detailed questions about the pricing structure, such as:

• Are storage fees included, or will I be charged extra?
• Are there additional sourcing fees for ingredients or packaging?
• What happens to unused materials or components after production?
• Are there costs associated with production overruns or shortfalls?

3. Not Clarifying Ownership of the Formula

One of the most overlooked aspects of working with a co-packer is determining who owns the product formula. If you’re bringing your own formula, ensure you have a written agreement stating that you own it outright. Without this, there’s a risk that the co-packer could use it for other clients or claim partial ownership.

On the flip side, if you’re using a co-packer’s stock formula, understand that they may not disclose all the details of their blend. While you’ll receive safety documentation and certificates of analysis, you might not have full control over the formula if you decide to switch manufacturers later.

4. Not Planning for When Things Go Wrong

Even with the best planning, things can and do go wrong. A batch may be off-spec, a key ingredient could be delayed, or an unforeseen event—like a supply chain disruption—could throw production off course. Having a contingency plan in writing before you start can save you from major headaches later.

Make sure you discuss and document:

• What happens if a batch is defective?
• Who is responsible for quality control issues?
• Does the co-packer carry liability insurance, and what does it cover?
• What recourse do you have if they fail to deliver on time?

5. Not Exploring Price Breaks and Cost Drivers

Many brands accept the quoted price from their co-packer without digging into what’s really driving their costs. Often, a single component—such as a specialized ingredient, label, or packaging material—is the main factor inflating costs.

To optimize pricing, ask your co-packer:

• What is the biggest cost driver in our production?
• Can we reduce costs by purchasing certain materials in bulk?
• Are there alternative packaging or ingredient options that would lower expenses?

Key Takeaways

• Set clear expectations with your co-packer from the beginning to avoid misunderstandings.
• Understand the full pricing breakdown, including hidden fees that may arise later.
• Clarify ownership of your product formula to avoid issues if you switch co-packers.
• Prepare for unexpected problems by having written agreements on quality control and liability.
• Explore ways to reduce costs by identifying the biggest pricing drivers in your production.

Working with a co-packer can be an excellent way to scale your business, but only if you approach the relationship with careful planning and clear communication. By setting expectations early, understanding pricing structures, clarifying ownership, preparing for challenges, and optimizing costs, you can create a successful and profitable partnership.

Have you had experiences—good or bad—working with a co-packer? Share your insights in the comments!

Additional Reading

• How to Start a Cleaning Product Line (Step-by-Step)

• The Truth About Marketing Label Claims: What Brands Need to Know

• What Is Packaging Compatibility Testing?

• The Pros and Cons of Using a Co-Packer vs. Manufacturing In-House

• How to Private Label Car Care Products: A Complete Guide