Contract Manufacturing Vs Private Label: The Difference Explained
Ready to start your beauty brand’s product development process, but need clarity around the difference between contract manufacturing vs private label?
Our simple-to-follow guide below explains these two different manufacturing methods in plain English.
We outline how private labeling and contract manufacturing compare across the four most important make-or-break considerations for a new beauty brand.
Keep reading to find out which manufacturing method will work best for your beauty business!
Contract Manufacturing vs Private Label - Definitions
Contract Manufacturing
Contract manufacturing involves partnering with a lab to bring an exclusive custom formulated beauty product to life.
Working with a professional lab is important for legal reasons and because formulating at home can be dangerous.
Let’s be real - how many beauty brand owners have touched a pair of safety goggles or even seen a viscometer since high school? Let alone have the technical skills to formulate a night cream with just the right blend of emulsifiers and preservatives?
If you have a super specific product idea in mind, a professional lab will do all of this scientific work for you - no chemistry knowledge is required on your part!
Once you have this product custom formulated, it’s time to move on to the contract manufacturing phase.
Typically, you would custom formulate and contract manufacture with the same beauty lab. If you own the legal rights to the formula, you will be able to custom formulate with one lab (lab A) and contract manufacture with another (lab B).
Genie Supply accommodates customers at different stages of their brand and product development journey. We’re happy to bring your homemade formula to life with the necessary tweaks to make it safe and legally compliant.
Completely new to the game? We also custom formulate totally from scratch. Plus, we can contract manufacture your existing formulas as long as you legally own all of the rights.
Private Label
As Forbes put it in 2022, private label is ‘Having Its Moment’! While it’s relatively unknown among the general public, it’s a popular manufacturing strategy across many industries.
Private labeling involves partnering with a lab to use their existing formula as your own. Simply order the products and add your own branding to differentiate your beauty business from the competition.
Are marketing and general business operations your strong suit? Leave the science-y ingredient selection and product-concept debates to the pros, and select directly from an existing catalog of ready-to-make private label cosmetics.
From cleansers and creams to sugar scrubs and lip glosses, Genie Supply has over 45 different private label beauty products to choose from.
We specialize in clean beauty and pack our private label formulas full of science-backed ingredients that really work for beautiful skin and seamless makeup looks. Make our private label collection your own through flavor and color customizations!
Plus, we offer private labeling on a turnkey basis. Send us your product packaging designs and we’ll handle all of your screen printing and packaging in-house.
Contract Manufacturing vs Private Label - The Pros and Cons Of Each Method
Cost
Private labeling is more cost-effective than contract manufacturing for small beauty brands.
Custom formulating/contract manufacturing brings your new exciting ideas to life, but the R&D, formula creation, and testing processes are lengthy.
With private labeling, the manufacturer already developed the formula and tested everything in advance. Simply select your products and the cosmetics lab will make them fresh for you. All that’s left to consider is your packaging!
Naturally, labs devote more talent and resources to custom manufacturing contracts and charge more for these services. This puts a strain on your small beauty brand’s budget.
An amazing custom formulated product could earn you more money in the long run, but for brands on a budget, private labeling wins this category.
NOTE: At Genie Supply, we don’t impose any MOQ on any of our manufacturing services! Instead, we simply place a small service fee for any orders under 5,000 units.
Time
As you might expect from the cost difference, the private labeling process is much quicker than custom formulating/contract manufacturing.
Estimate Times For Custom Formulating/Contract Manufacturing:
While every lab varies, custom formulating can take anywhere from a few months to over a year. And that’s just to develop a formula! Add another few months for contract manufacturing. It’s difficult to predict how long it will take until you pass the R&D stage into that all-important formulating stage.
Any good cosmetics lab will regularly send you prototype samples for feedback. Major adjustments or tweaks at every step of the way will add significant delays to the entire process (but it’s all worth it in the end!).
At Genie Supply, our custom manufacturing/contract manufacturing process takes just 3 - 12 months on average. If you already have a custom formula, our contract manufacturing service averages 3-4 months (including customized packaging). Learn more about our manufacturing timeline on our blog.
Estimate Times For Private Labeling:
The lead times for private labeling are much easier to predict. It’s not the lab’s first rodeo with making this specific formula! Following a simple onboarding process, the supplier produces and tests batches of the formula before moving on to the packaging and assembly stage.
Genie Supply’s entire private label process (including screenprinting and customized packaging) only spans for 6 - 8 weeks on average!
Control & Customization
Numerous Customization Options For Contract Manufacturing:
Do you have your heart set on a totally unique product concept or an uncommon mix of ingredients? Custom formulating and then contract manufacturing is the way to go.
Choosing this route opens the door to creativity and helps develop your USP. Wow your customers with a product concept that they’ve never seen before, and promise skincare benefits with a combination of ingredients that you just won’t find anywhere else!
At Genie Supply, we LOVE a challenge. Our custom manufacturing service specializes in:
Clean beauty products (especially skincare)
New-to-market formulations and hybrid beauty products
Innovative chemical research and formulation
Limited Customization Options For Private Labeling:
This is where private labeling falls short vs contract manufacturing. While you can impress your customers with private label beauty products, the formula will not be unique.
If you choose to private label, it’s even more important to focus on your branding to stand out. Learn more about our customizable packaging service on our blog.
Ownership Rights
The ownership rights over product formula may not seem like a big deal – until it becomes a huge one.
What if your manufacturer closes down? Or if you no longer want to work with that particular lab?
Limited/No IP Rights For Private Labeling:
When it comes to private labeling, the lab you work with will always own that specific formula and all of the IP rights associated with it. It’s difficult to switch from one lab to another, especially if you sign a non-circumvention agreement.
You cannot take their private label products, bring them to another lab, and ask them to make an almost identical formula for you. Your new lab’s formula needs to have a “significant difference” that passes the legal threshold.
Private labeling obviously appeals to you, but now you need to custom formulate and your products just won’t be the same as they were.
Potential For Full IP Rights With Contract Manufacturing:
A huge advantage of custom formulating/contract manufacturing is the possibility of owning the formula and all of the IP rights associated with it. Custom formulate with one lab and contract manufacture the product with another lab if you wish!
Always consult your lawyer and put a contract in place that clearly states you have full ownership rights to the formula. Read more about ownership rights and what to do if you need to switch labs over on our blog.
The Best Alternative: Custom Product Creation
Still weighing up the pros and cons, and not sure which option makes sense for your beauty brand? Our custom product creation service offers the best of both worlds!
Choose from 100s of base formulas and add your unique touch to the product. Customize an existing formula so that it feels unique to your brand without breaking the bank or lingering in the development stage for months and months.
Contract Manufacturing Vs Private Label Summarized:
Private labeling saves on time and costs vs contract manufacturing
Contract manufacturing wins when it comes to customization and ownership rights
Our custom product creation service meets in the middle between these two extremes
Ready to get started with your beauty product journey? We’re always on hand to answer any questions about our manufacturing services! Email us: customerservice@geniesupply.com or call (812) 329-1105.
