$15 to $88: The Truth Behind E-commerce Pricing and MOQ

By TOM | Founder of TOM SOURCING

21th of July, 2025 in Shanghai

Not long ago, I was chatting with a client from Spain. He runs a small e-commerce business and wanted to sell a custom pillow on Amazon. The product itself, with packaging, weighed about 1kg. He had found a factory that offered a quote of $15 per piece.

He asked me: "TOM, how much is shipping to the US by air?"

I checked the latest freight rates and told him, "Roughly $23 per unit for air shipping."

He was surprised. But then he broke it down further:

• Product: $15
• Air freight: $23
• Amazon fees: $20
• His expected profit: $30

Total: $88 for a $15 product.

He said, "Wow. That’s crazy. E-commerce isn’t supposed to be this expensive."

And yet—this is the reality.

The Real Cost Behind That $15 Product

Many new e-commerce sellers assume that by skipping traditional distributors and going "direct to consumer," they’ll unlock massive savings. But that’s not always the case.

Let’s break it down:

Meanwhile, the factory might be making just $1.5 to $3 per unit. Same for us sourcing agents.

So, who’s really making the most? The platform and the brand.

Why MOQ Isn’t Just a Number—It’s a Lifeline

In this case, the factory had a minimum order quantity (MOQ) of 1,000 units. The client wasn’t thrilled. He asked, “Can they do 100 first?”

Now, from a buyer’s perspective, that sounds reasonable. But here’s what most people don’t realize:

Let’s say:

• Setting up a production line takes 1 hour
• Actual production of 100 pieces takes 1 hour
• Cleaning and resetting takes another hour

That’s 3 hours of machine time. At $200/hour, the overhead cost is $600.

• If you produce 500 units: $600 / 500 = $1.20/unit in fixed cost
• If you produce 100 units: $600 / 100 = $6.00/unit in fixed cost

The cost per unit skyrockets.

So even if a factory can make a small batch, it often chooses not to. Because they’re not trying to be difficult—they’re trying to stay alive.

The Sourcing Agent's Role in This Puzzle

At TOM SOURCING, we often sit between two worlds: the factory’s operational reality, and the buyer’s commercial expectations.

We explain, we negotiate, we bridge the gap. Sometimes we can convince a factory to do a small trial run, but that’s often because we’ve worked with them before—and they trust us.

But the logic remains: MOQ exists for a reason.

We also help clients avoid unrealistic projects. Sometimes a product idea just doesn’t work when you factor in logistics and cost. It’s better to find that out early, than waste time and money chasing a dream that won’t scale.

Respect the MOQ, Respect the Process

E-commerce has changed the way we shop, but it hasn’t changed the laws of economics. Production still costs money. Logistics still takes time. Everyone in the supply chain still needs to make a living.

So next time you’re frustrated by a factory’s MOQ, remember: it’s not just about them. It’s about sustainability—for everyone.

Sometimes, the MOQ is not a barrier.

It’s the beginning of a real business.

About the Author

TOM is the founder of TOMSOURCING.COM, a Shanghai-based sourcing agency helping global brands bring their products to life—efficiently, reliably, and professionally.