Food Business Almanac: Breaking down a UPC Code

By on August 30, 2013

NCDA&CS food business specialist Annette Dunlap offers resources that agribusiness owners and food entrepreneurs can use to grow and manage their business. Annette is available for free one-on-one consultations and can assist business owners with financial and market planning through the agribusiness development section. She can be reached at annette.dunlap@ncagr.gov.

UPC Codes, or Universal Product Codes, are those funny lines with the numbers underneath that are, well, universal on nearly every product we buy.

Most of us think that all a UPC code does is speed up the checkout process at the store. But UPC codes do so much more, from tracking inventory to letting us know how much product we’ve sold. A reliable UPC code is a must for good record keeping.

A UPC code is made up of 12 digits. The first six to nine digits are the company prefix. If you are selling to a major retailer, then you will likely be told that you have to have your own company prefix. This means that you will have to join GS1, a nonprofit organization that has the authority to assign company prefixes for UPC codes.

A  small retailer who uses UPC codes mainly for inventory and sales tracking may allow you to purchase your UPC code from a reseller. A qualified barcode reseller owns the company prefix of the UPC code, but generates a unique product code for you to use based on your needs.

There is a big difference between the cost of a GS1 code and the cost of a reseller code. The important thing to remember is that when you purchase a GS1 membership, you will own your own company code. When you purchase a GS1 code, you will pay an initial fee to join. Then you will have to pay additional fees based on your annual sales revenue and the total number of products you need bar codes for. You also will pay an annual renewal fee to retain ownership of that number.

You will find that there will be differences in what resellers charge. If your buyers allow you to use a reseller for your UPC codes, then you want to make sure that you purchase a code from a reputable reseller who guarantees that your product code numbers are unique.

As you think about whether or not to purchase a UPC code through GS1 or through a reseller, keep these things in mind:

  1. Know what your retailers require. If they tell you that you must have a GS1 code, then you will need to join GS1 to get your own company code.
  2. Think about your business plan. If your goal is to grow your business so that you are eventually selling to larger retailers, then you will eventually have to join GS1.
  3. Budget for the costs of UPC code purchase. As of this post, membership in GS1 starts at $760 and there are additional fees involved. Reseller rates are lower, but you will still have ongoing expenses.

UPC codes offer an opportunity for manufacturers and vendors to assign unique numbers to each item that they produce and sell. Every size, flavor and brand can have its own UPC code. Tracking the code allows a business to monitor inventory levels and keep track of sales dollars. They can be a great tool to help you know how well your business is doing.

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