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Masterbatch is the normal way of adding colourant to bulk, uncoloured resin. It comprises highly concentrated pigment, mixed with a carrier plastic, in a granule/pellet form. The granules/pellets are the same size and shape as natural (uncoloured) resins so are easy to handle (pigments are normally powder or liquid) and mix. Compounding is where the bulk plastic is all pre-coloured, usually by adding powder/liquid colourant during the extrusion/chopping process used to make the pellets. Compounding can be more convenient but is a little more expensive and limits flexibility for colour changes in production.

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