Should You Manufacture in Australia? The Honest Numbers

The founders who ask me this almost never ask it as a cost question. They ask it as a values question, and that is how it gets expensive.

Australian made is the thing everyone says they want, right up until the checkout. The founders who ask me have usually built the brand, found the local maker and fallen in love with the story, and have not yet worked out what the finished product has to retail for. That order of operations is the whole problem.

Should you manufacture your product in Australia?

Only if the premium your customer will actually pay is bigger than the cost gap, and in most categories it is not. Australians do want local. Roy Morgan research for Australian Made Campaign Ltd, published in May 2025, found 72 percent of Australians willing to pay more for locally made goods, and 84 percent more likely to buy a product if they knew it was Australian made. Then comes the line nobody quotes. Of those willing to pay more, half said they would pay up to 10 percent more.

Ten percent. That is the size of the prize. If making your product here costs you 40 percent more, the market has already answered the question and you are only deciding how long to argue with it.

The badge works. The price does not.

There is nothing wrong with the demand signal. The green and gold logo is recognised by 99 percent of Australians, which is better recognition than almost anything you will ever build yourself. People genuinely prefer local and they will choose it on a shelf, all other things being equal.

All other things are rarely equal. Survey data measures what people say in a quiet moment with no wallet in their hand. It is directional, not a pricing model. Treat the 10 percent as a ceiling rather than a promise, and build the business so it works at zero.

What "Made in Australia" actually lets you say

This is where founders come unstuck, and it costs more than the manufacturing decision itself.

Under the Australian Consumer Law, a "Made in Australia" claim rests on the goods having been last substantially transformed here. The test in section 255(2) is whether the finished product is fundamentally different in identity, nature or essential character from the imported components that went into it. Importing parts and putting them together in a shed in Thomastown does not automatically clear that bar. Merely assembling imported components may not count as substantial transformation at all.

The old test, where at least half your production costs had to be incurred in Australia, was removed on 23 February 2017. Plenty of advice online still quotes it. Ignore that advice.

The green and gold logo is a separate thing again. It is not a claim you make, it is a licence you hold, issued by Australian Made Campaign Ltd under its code of practice. I am not a lawyer and none of this is legal advice, so check with the ACCC or an IP solicitor before you print anything. Source Haus has the labelling detail, including what you have to disclose when the parts come from somewhere else, in the Australian country of origin labelling rules.

Compare landed cost to landed cost, not quote to quote

Most founders run this comparison wrong, and they run it wrong in both directions.

The national minimum wage is $26.44 an hour from 1 July 2026. That is the floor for an adult on the national minimum, not what a skilled machinist costs, and it sits before superannuation, leave, workers compensation and the time of whoever manages the line. Local labour is expensive and there is no version of this where it is not.

The overseas quote is not the real number either. I have written before about the mistake that cost me a year, which was pricing off a factory quote instead of a landed cost. Add freight, duty, the customs broker, destination charges and the cash you have tied up for 90 days, and the offshore number moves a long way. Source Haus has the working in how to calculate landed cost per unit.

Run it properly and the gap is usually narrower than founders expect, and still wider than 10 percent. That is the decision in one sentence.

Then there is the part that kills it quietly. If you sell wholesale, your cost has to survive being roughly halved before it reaches a customer. A cost base that works beautifully direct to consumer can make wholesale structurally impossible, which is a different problem from being expensive. I have written about choosing between the two in wholesale versus direct to consumer.

When making it here is the right call

There are real cases for it, and they are not the sentimental ones.

• Low value density. If the product is bulky or heavy relative to its price, freight eats the overseas saving before the stock reaches your warehouse.
• Short runs. If the overseas minimum order quantity is the blocker rather than the unit price, a dearer local run of 200 beats a cheaper run of 2,000 you cannot sell.
• Fast replenishment. If you sell into a season and cannot wear a 90 day lead time, local capacity is worth paying for.
• Categories where the premium is genuinely more than 10 percent. Food, skincare and anything where provenance is part of the product can carry a real local premium. A plastic homewares line cannot.
• First runs you want to watch. Standing there while the first hundred units come off the line is worth money, and occasionally worth more than the margin.
• Regulated or perishable product, where the compliance and shelf life maths beats the unit price maths.

When it is not

When you are buying the badge rather than the capability. When the honest description of what you are doing is assembly, so you cannot make the claim anyway. When you need scale pricing to make wholesale work and you have chosen a cost base that can never get there.

None of that makes local manufacturing a mistake. It makes it a decision with a price attached, and you should know the price before you commit to it.

What I would do

Get both numbers properly. Landed, in the same spreadsheet, for the same quantity. Then price the finished product off the Australian cost and look at the retail price it demands. Would you buy it? Would you buy it standing next to the imported one on the same shelf?

If yes, make it here and put the story everywhere, because the story is worth about 10 percent and you will need all of it. If no, make it overseas and be straight on your labels. The brands that get into trouble are the ones that want the local story and the offshore cost base, and try to have both on the packaging.

A lot of brands land somewhere in the middle. The hero line made here, the volume line made overseas, and no confusion about which is which. That is not a compromise. It is two different products doing two different jobs.

Sixteen years in and I still get both quotes every time, because the answer moves with volume, freight rates and the exchange rate. The answer I had three years ago is not the answer today.

Curious what your current manufacturing arrangements are actually costing you? Explore Source Haus.