£7.15 vs £9.90

Order 25 tea towels at £7.15 per unit.

Or order 5 tea towels at £9.90 per unit.

I ordered 25.

It was the right call. Better unit cost, better margin, standard production logic. Any operations professional would have done the same thing.

It was also completely wrong, and understanding why is the difference between a production decision and a sales decision pretending to be a production decision.

What I was actually optimising for

Here’s the pricing breakdown I was working from:

25 units: £7.15 per unit. Total cost: £178.75.

5 units: £9.90 per unit. Total cost: £49.50. Higher unit cost, worse margin.

At a retail price of £16, ordering 25 gave me a cash margin of £2.43 per unit. Ordering 5 dropped that significantly. The MOQ wasn’t just a minimum — it was a margin decision.

So, I focused on the number that would give me the best return per unit sold. Which is correct. That is how production economics work.

The problem is that “per unit sold” assumes units will be sold.

And I made decisions based on the assumption that I could easily sell 25 units.

The question I didn’t know to ask

To sell 25 tea towels at £16, at a 0.96% conversion rate with a £27 average order value, I needed roughly 1,620 website visits from people who didn’t already know me.

I had about 100.

Which means before I even confirmed that production order, before I paid for it, before the units were printed, the maths already showed I would sell approximately 1 unit to a stranger.

Not 25. One.

The other 24 went into my spare bedroom, where some of them still are.

In every job I had in product operations and production, the audience already existed — my job was to serve it, not to question whether it was there. So I didn’t know to run that calculation. And when I built my own business, I carried the same process forward. Optimise the cost structure. Hit the MOQ. Manage the margin.

I just forgot to check if anyone was coming to the shop.

The sequence problem

This is what I keep coming back to when I think about how production planning works in founder-led businesses.

The MOQ decision sits inside the production process. It lives on the pricing ladder, next to unit costs and margins and expenses. And that’s where it gets made — in the context of cost optimisation, supplier negotiation, margin management.

But it should also be made in the context of something else entirely: how many units can you realistically sell, given the audience you actually have right now?

Those two questions live in different spreadsheets. Different conversations. Different parts of your brain.

And as long as they stay separate, you can make a perfectly rational production decision that is completely disconnected from commercial reality.

The sequence matters:

1. How many units can I realistically sell? (audience × conversion rate)

2. What MOQ does that support?

3. What does that MOQ do to my unit cost and margin?

4. Is this worth making at all?

Most production planning runs that sequence in reverse. Start with the supplier’s MOQ, work backwards to margin, decide if the numbers work. The audience never enters the calculation because it’s assumed.

When you’re a new business with 18 email subscribers, that assumption will end your launch before it starts.

What the calculation actually looks like

Before confirming any production order, run these three numbers against each other:

Your realistic sales ceiling:

current audience × estimated conversion rate × average order value

This is the maximum revenue this product can generate right now, not in theory.

Your break-even unit requirement:

total production cost ÷ cash margin per unit

This is the minimum number of units you need to sell to recover your investment.

Your MOQ:

The minimum the supplier will produce.

Then ask: does your sales ceiling cover your break-even? And does your break-even require fewer units than the MOQ?

If your sales ceiling is below break-even, the product isn’t ready to produce. Audience problem, not product problem.

If break-even requires 8 units but the MOQ is 25, you have a decision to make: negotiate the MOQ down, find a supplier with lower minimums, or accept that you’re buying 17 units of speculative stock.

In my first launch, my numbers looked like this:

Realistic sales ceiling from stranger traffic: ~£26 (1 order)

Break-even unit requirement: ~12 units

MOQ: 25 units

Even if I had hit break-even, I would still have been left with 13 unsold units.

The right call wasn’t to optimise the unit cost.

The right call was to not place the order yet.

What I would do differently

This isn’t a post about avoiding production entirely or being so conservative you never make anything. The tea towels were good. The 60% sell-through rate proved that — when people saw them, they bought them.

The product wasn’t the problem.

The problem was placing a production order before the audience existed to support it, then optimising the unit economics of an order that never had a realistic chance of selling through.

If I ran the same decision today, the sequence would be:

Calculate my realistic sales ceiling based on current audience.

Work out what MOQ that sales ceiling can support at my target margin.

Go to suppliers with that number, not theirs.

If no supplier can hit that MOQ at a viable unit cost, the product isn’t ready to produce — yet. Build the audience first. Come back when the maths works.

The unit cost conversation is worth having. Better margins matter. But they’re the second question, not the first.

The first question is always: how many can you actually sell?