Sellevate

Inventory

What does MOQ mean?

MOQ stands for minimum order quantity: the smallest order a supplier will accept, in units or as a minimum order value. MOQs exist because every order has setup costs for the supplier. For an online store, a high MOQ can force you to buy more than you need, tying up cash and raising the risk of dead stock.

How MOQs are set

TypeExample
Per product500 units of each SKU
Per order1,000 units across any products in the order
Per variant200 units per color
By valueMinimum order of $5,000

MOQ vs EOQ

MOQ is the supplier's rule. EOQ (economic order quantity) is your own best order size: the one that minimizes the combined cost of placing orders and holding stock.

EOQ

EOQ = √(2 × Annual demand × Cost per order ÷ Annual holding cost per unit)

Worked example: when the MOQ is bigger than EOQExample numbers

InputValue
Annual demand1,000 units
Cost per order$50
Holding cost per unit per year$2
Unit cost$8
Supplier MOQ500 units
  1. EOQ = √(2 × 1,000 × $50 ÷ $2) ≈ 224 units
  2. Ordering at EOQ: 4.47 orders a year × $50 = $224; average stock 112 units × $2 = $224. Total ≈ $447 a year
  3. Ordering at the MOQ: 2 orders a year × $50 = $100; average stock 250 units × $2 = $500. Total = $600 a year

The MOQ costs about $153 a year more in ordering and holding costs. It also needs $4,000 of cash per order (500 × $8), against about $1,790 at EOQ.

Economic Order Quantity (EOQ) CalculatorThe order size that minimizes your combined ordering and holding costs.

How MOQs affect cash and dead stock

Tips for negotiating MOQs down

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When a high MOQ is worth accepting

For how order size fits with when to reorder, see the guide to inventory replenishment and the EOQ calculator.

FAQ

What does MOQ mean?

Minimum order quantity: the smallest order a supplier will accept, set in units or as a minimum order value.

Why do suppliers set MOQs?

Each production run or order has fixed setup costs, such as machine setup, materials bought in bulk and admin. MOQs make sure each order is large enough to be worth producing.

Can I negotiate an MOQ?

Often, yes, especially with repeat orders, a slightly higher unit price, or by combining variants. It's usually easier to negotiate once you have a track record with the supplier.

What's the difference between MOQ and EOQ?

MOQ is the minimum the supplier will sell you. EOQ (economic order quantity) is the order size that minimizes your own ordering and holding costs. If MOQ is higher than EOQ, you'll hold more stock than is ideal.