At TransitionHERO, we help scaling greentech teams choose between contract manufacturing or their own pilot plant. Here we explain what to think about if you are deciding for your process.

The contract manufacturing vs pilot plant question tends to show up right after the lab work is done. Your process works in the lab, and now you need material or data at a bigger scale. Outsource it to a contract manufacturing organization (CMO), or build the pilot plant yourselves? There are 5 questions you can ask your team to get started with the process.

1. Production volume or process learning?

Start with your end goal.

• If you are after production volume, contract manufacturing organisation (CMO) can work well without tying up capital in a plant. CMO can provide samples for offtake talks or early revenue as well.
  
• If you are after learning, you want the process data needed to design a full-scale facility. Running your own pilot plant will provide you with more data to learn from, as you have space to experiment.

2. Drop-in tech or a novel process?

• Standard equipment and unit operations are easy for a toller or CMO to take on, so drop-in technology is a strong CMO fit.
  
• A new or tightly integrated process, common in circular chemistry, waste-to-value and fermentation, often does not map onto an existing plant.

One documented biotech case (Case Study 3- Irach Taraporewala), involved a specialized production process that would have needed costly modifications to a contract manufacturer’s facility, which pushed the company to build in-house instead. If your process looks like that, you may need a pilot earlier than planned.

3. Fixed capital or flexible spend?

• A CMO turns a large upfront CAPEX into pay-as-you-produce OPEX, which keeps you flexible if the market or the technology shifts.
  
• Your own pilot is a fixed commitment that keeps costing money even when it sits idle, in staffing, utilities and maintenance.

The fair comparison is not the sticker price, it is total cost over the life of the product, including the runway you protect and the capital you free up for the technology itself.

4. Which TRL stage are you at?

• Outsourcing or sharing facilities in early TRL stages is usually the cheaper way to bring down risk.
  
• Later on, once your process and production volumes justify the capital, it makes sense to start bringing assets in-house.

It helps to decide upfront, as part of your scale-up roadmap, when that switch point is reached, so it is not a decision made under pressure.

5. What is your final product?

• If you need material to prove a market, contract manufacturing is usually the less risky, cheaper option.
  
• If the pilot plant itself is your product, meaning the data and operating experience you gain from running it, building it yourselves is what gets you there.

Weighing the five together

None of these five questions decides the outcome alone. In practice, most teams lean toward contract manufacturing, their own pilot, or a hybrid of both, once they see how the answers stack up. These are the same questions we ask clients who want to scale up, alongside the cost drivers and de-risking steps we cover in our scale-up recipe for greentech startups.

Ready to compare your options?

Whichever direction you lean, the more useful next step is turning it into numbers: a clear techno-economic comparison of both paths for your specific process and TRL stage. Comparison requires some expertise, so let us help you! Get in touch with our team.