How to Price Your Supplement: From COGS to Retail
Pricing a supplement wrong is one of the fastest ways to kill a brand. Price too low and you run out of cash. Price too high and you never gain traction. This guide walks through the math: what your costs actually are, what margins you need by channel, and how to set prices that sustain a business.
Dietary supplement manufacturers must comply with 21 CFR Part 111 (Current Good Manufacturing Practice for dietary supplements). This includes requirements for personnel, facilities, equipment, production, laboratory operations, and record-keeping.
Understanding Your COGS
Cost of goods sold (COGS) is the total cost to produce one unit of your product. This includes raw ingredients, manufacturing, packagingSupplement PackagingThe containers, closures, and labeling that protect and identify a supplement product., labeling, and testing. It does not include marketing, shipping to customers, or overhead.
COGS varies significantly by dosage formDosage FormThe physical form in which a supplement is delivered (capsule, tablet, powder, etc.).. Capsules and tablets are the most cost-effective for most formulations. Gummies and softgels require specialized equipment and typically cost more. Powders depend heavily on serving size and ingredient costs.
| Dosage Form | COGS Range (per unit) | Typical Retail | MOQ Range |
|---|---|---|---|
| Capsules | $3 - $7 | $25 - $45 | 5,000 - 10,000 |
| Tablets | $3 - $7 | $20 - $40 | 10,000 - 25,000 |
| Powders | $4 - $10 | $30 - $60 | 5,000 - 10,000 |
| Gummies | $5 - $12 | $25 - $50 | 10,000 - 25,000 |
| Softgels | $6 - $12 | $30 - $55 | 10,000 - 25,000 |
| Liquids | $6 - $15 | $30 - $60 | 5,000 - 10,000 |
These ranges assume standard MOQMOQ (Minimum Order Quantity)The smallest production run a manufacturer will accept for an order. runs. Per-unit costs drop 15 to 30 percent at volumes above 25,000 units. For detailed cost analysis, see our guide to supplement manufacturing costs.
What COGS Doesn't Include
COGS tells you the production cost per unit. Your actual cost to sell a unit is higher. These additional costs must be factored into your pricing model:
| Cost Category | Typical Range | Notes |
|---|---|---|
| Shipping to customer | $3 - $8 per order | DTC only. Higher for heavy powders or liquids. |
| Fulfillment/3PL | $2 - $5 per order | Pick, pack, and ship fees. |
| Amazon fees | 30 - 40% of sale price | Referral fee (15%) + FBA fees. Varies by product size. |
| Payment processing | 2.5 - 3.5% | Shopify, Stripe, or similar. |
| Returns/refunds | 3 - 8% | Supplement return rates vary by channel. Amazon is higher. |
| Advertising | 15 - 30% of revenue | Essential for DTC and Amazon. Highly variable. |
| Insurance | $250 - $500/month | Product liability. Required for Amazon above $10K/month. |
Margin Targets by Sales Channel
Different sales channels have different cost structures. Your pricing needs to account for these differences. A product that is profitable on your own website may lose money on Amazon.
Direct-to-Consumer (DTC)
Highest margins but highest customer acquisition cost. Target 60 to 80 percent gross margin. Net margins of 25 to 40 percent are achievable for brands with repeat customers. The key metric is customer lifetime value: a customer who buys monthly for 6 months is worth far more than the first sale margin suggests.
Amazon (FBA)
Amazon takes approximately 30 to 40 percent of your sale price through referral fees, FBA fees, and advertising. Target 50 to 65 percent gross margin before Amazon fees. After fees and advertising, net margins of 10 to 20 percent are typical for successful supplement brands. Below 50 percent gross margin, Amazon becomes unprofitable once advertising costs are included.
Wholesale / Retail
Retailers typically expect a 40 to 50 percent markup on wholesale price. If you sell a product for $15 wholesale, the retailer prices it at $25 to $30. Your wholesale gross margin needs to be at least 40 percent to remain viable. Volume makes up for lower per-unit margins. Wholesale also builds brand credibility for DTC and Amazon channels.
Subscription (DTC)
Subscription models typically offer 10 to 20 percent discounts to lock in repeat purchases. Even with the discount, the predictable revenue and reduced acquisition cost make subscription the most profitable DTC model for supplement brands. A subscriber who stays for 6 months has an acquisition cost of zero after the first month.
The Pricing Math: A Step-by-Step Example
Suppose you are launching a capsule product with the following costs:
- COGS per unit: $5.00 (manufacturing + ingredients + packaging + testing)
- Fulfillment per order: $3.50 (3PL pick/pack/ship)
- Payment processing: 3 percent of sale price
- Target gross margin (DTC): 70 percent
At a 70 percent gross margin, your sale price needs to be at least $16.67 ($5.00 / 0.30). Adding fulfillment and processing costs, you need approximately $20 to $22 for viable unit economics. Round up to $24.99 or $29.99 depending on market positioning.
This calculation does not include advertising. If you spend 20 percent of revenue on customer acquisition, that adds another $5 to $6 per unit at a $29.99 price point. Your net margin after all costs is the actual profit per sale.
MAP Pricing for Multi-Channel Brands
Minimum Advertised Price (MAP) policies protect your pricing across channels. Without MAP, your Amazon sellers and retail partners will undercut each other. Your DTC customers will feel penalized for buying directly from you.
A MAP policy sets the lowest price any reseller can advertise. They can sell below MAP, but they cannot advertise below it. This is a critical tool once you have more than one sales channel.
MAP enforcement requires monitoring. Brands that set MAP policies but never enforce them quickly find the policy ignored. Budget for monitoring tools or manual checks as part of your multi-channel operations.
Common Pricing Mistakes
- Pricing based on competitor labels. You don't know their COGS, their volume discounts, or whether they're profitable. A competitor selling at $19.99 might be losing money on every unit while burning venture capital.
- Ignoring channel-specific costs. A $29.99 product that is profitable on Shopify may lose money on Amazon after referral fees, FBA fees, and advertising costs are factored in.
- Setting prices too low to gain market share. Low prices attract price-sensitive customers who leave when a cheaper option appears. They also set expectations that are difficult to raise later.
- Not planning for price increases. Ingredient costs rise. Tariffs change. Insurance premiums increase. Build margin room for cost increases rather than needing emergency price hikes.
- Forgetting about returns and refunds. Returns cost you COGS plus shipping plus restocking. A 5 percent return rate on a $30 product costs $1.50 per unit sold across your entire inventory.
- Pricing private label like custom formulations. Private label products compete in commoditized markets. Custom formulations with clinical backing can command premium pricing. Know which category your product falls into.
When and How to Raise Prices
Price increases are inevitable. Raw material costs, shipping rates, and regulatory compliance costs all trend upward. The question is not whether to raise prices, but how to do it without losing customers.
- Raise prices with a new product version or improved formula. Customers accept paying more for something that is visibly better.
- Give existing subscribers advance notice (30 to 60 days) before a price increase takes effect. Loyal customers deserve transparency.
- Increase prices on new customers first. Existing subscribers stay at their current rate for one to two renewal cycles.
- Small, regular increases (5 to 10 percent annually) cause less friction than large, infrequent jumps.
- Document your reasons. Rising ingredient costs and increased testing standards are legitimate. Customers respect honesty.
Disclaimer: This guide is educational content, not financial or business advice. Pricing data represents industry ranges and will vary based on your specific product, volume, and market. Consult with a financial advisor or business consultant for pricing decisions specific to your brand. See our Terms of Service for details.