What to Ask a Manufacturer Before You Sign a Purchase Order

A purchase order is the last point where you have real leverage. Every question you didn't ask before signing becomes an assumption you're now paying to find out about.

Most founders treat the PO as a formality, the paperwork step that follows the real decisions. In practice, it's the opposite. The PO is where vague understandings become binding commitments, and where gaps between what you assumed and what the factory assumed get locked in. The questions below aren't theoretical. They're the ones that, left unasked, account for the majority of first-run cost surprises and quality problems.

What yield assumption is behind this price?

Yield is the number of sellable units you get from a given amount of raw material. Your quote almost certainly has a yield figure baked into it, and that figure is almost certainly not stated anywhere on the document. If actual yield comes in lower than what was assumed, your effective material cost per unit goes up, and you won't know about it until after the run.

Ask directly: what yield rate was used to calculate this quote? Then ask what happens to the unit price if yield comes in below that number. The answer you're looking for is clarity about who absorbs the cost when the assumption is wrong, not a guarantee of a specific yield. If the factory treats the quoted price as fixed regardless of yield, that risk is priced in somewhere else. If the price adjusts based on actual yield, you need to know that before you sign, not after.

What exactly is included in the unit price?

This sounds like it should be obvious from the quote. It frequently isn't. Decoration (printing, embroidery, labeling), packaging, hangtags, poly bags, and carton packing are sometimes bundled and sometimes quoted separately, and the two can look identical on paper.

A $0.60/unit decoration cost left out of the original quote adds up fast at any real volume.

Ask for a line-by-line breakdown of what the unit price covers. Then ask explicitly about each finishing step: is labeling included? Packaging? Hangtags? Poly bagging? If any of those come back as "that's separate," get the cost in writing before the PO is finalized. The full picture of what sits outside a factory quote is almost always wider than founders expect on a first run.

What is the realistic lead time, and what would push it?

Factories quote lead times optimistically, and the number you see on a quote usually assumes everything goes perfectly: materials arrive on schedule, no other large orders compete for capacity, approvals happen immediately. Ask what the lead time assumes about material procurement, current production load, and approval turnaround on your end.

Then ask what happens if any of those slip. A two-week delay in fabric delivery, for example, might push your production window into another customer's scheduled run and add weeks you didn't plan for. If your launch date depends on a specific delivery window, you need to know now whether the quoted lead time has any cushion in it or whether it's the best-case number.

What are the tolerances, and what's the defect threshold?

"We'll match the sample" is not a specification. Every production run has variation. The question is how much variation is acceptable and what happens when units fall outside that range.

Ask for the factory's standard tolerances on your key measurements. For apparel, this is typically expressed as a plus-or-minus range per measurement point. Then ask what defect rate is considered acceptable and how defective units are handled. Some factories will rework or replace units that fall outside tolerance. Others consider a certain defect rate normal and ship accordingly. You want this in writing before the PO, not discovered during incoming QC.

Who is the legal entity, and does it match the payment account?

This is one of the most commonly skipped checks and one of the most expensive when it goes wrong. The legal name on the factory's business license should match the name on the bank account you're wiring the deposit to.

A single naming mismatch between the license and the payment account can cost thousands, and it's routinely dismissed as "just an admin thing" until it isn't.

If you haven't already verified the manufacturer's registration and business scope, do that before the PO stage, not after. Confirming entity details at the PO stage is a final check, not a substitute for earlier verification.

What happens if the order needs to change after production starts?

Plans change. A colorway gets dropped, a size ratio shifts, a material becomes unavailable. Ask now what the process and cost implications are for changes after the PO is signed. Most factories have a cutoff point after which changes incur additional charges or delay. Knowing where that cutoff falls, and what it costs to cross it, is better learned before you're in the middle of it.

What the PO should look like when you're done

A PO that's ready to sign should have explicit answers to every question above, written into the document or into a referenced specification sheet. Unit price with a line-by-line breakdown. Yield assumptions stated. Tolerances documented. Lead time with conditions noted. Payment terms tied to a verified legal entity. Defect thresholds and rework policy agreed.

If your PO doesn't have these, it isn't ready to sign. The questions are simple. The cost of not asking them is not.

If you're at the point where a deposit is on the table and you want an independent second opinion on what you might be missing, that's what The Production Audit is built for: a fixed-fee review of your quote, supplier, and cost structure before you commit.