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Good supplement pricing starts from your full landed cost per unit, not the factory quote. Add freight, duties, packaging, fulfillment and payment fees. Then set a wholesale price that leaves you a healthy margin, and a retail price that leaves the retailer theirs. Always calculate margin as a share of the selling price, not as a markup on cost.
Key takeaways
- Margin is profit divided by the selling price. Markup is profit divided by cost. A 50% markup is only a 33% margin.
- The B.C. Ministry of Agriculture and Food’s pricing guide says grocery retail margins typically range from 35% to 40%.
- Hidden costs such as listing fees, early-payment discounts and promotional allowances belong in your price from day one.
- First runs cost more per unit, so plan supplement pricing for your second run, not just your first.
Most first-time founders price backwards. First they pick a shelf price that looks right, subtract the factory quote, and call the difference profit. Then freight, Amazon fees, a retailer’s margin and a few returns arrive, and the profit disappears. This guide walks through supplement pricing in five steps, with a worked example you can copy into a spreadsheet.
Step 1: Build your landed unit cost
For supplement pricing, your manufacturer’s quote is the start, not the total. The Business Development Bank of Canada’s guide to setting the right price begins with direct costs, including materials, duties and freight. For a supplement, the landed cost per unit usually includes:
- Manufacturing. Formula, filling, the bottle or pouch, the label and finished product testing, as quoted.
- Inbound freight. Shipping from the factory to your warehouse or 3PL, divided by units.
- Duties and brokerage. If the product crosses a border.
- Fulfillment. Receiving, storage, pick and pack per order.
- Payment and platform fees. Card processing, marketplace commissions.
- Allowances. Samples, damaged units and returns.
Next, divide the total of each line by the number of sellable units. Then that number is the floor for every price you set. Our guide to the cost to launch a supplement in Canada covers the one-time costs that sit on top, such as design and licensing.
Step 2: Learn the difference between margin and markup
This one idea causes more supplement pricing mistakes than any other. The B.C. Ministry of Agriculture and Food’s guide, How to determine the right retail price for your product, defines margin as (retail price minus cost) divided by retail price. Because retailers think in margin, you should too.
| If your cost is $10 and you… | Selling price | Margin |
|---|---|---|
| Add a 50% markup | $15.00 | 33% |
| Add a 100% markup | $20.00 | 50% |
| Target a 50% margin | $20.00 | 50% |
| Target a 60% margin | $25.00 | 60% |
So to hit a target margin, divide the cost by one minus the margin. For a 60% margin on a $10 cost, that is 10 ÷ 0.40 = $25.
Step 3: Price down the chain from retail
Supplement pricing gets harder once a middle layer appears. If you plan to sell through stores, every layer between you and the shopper needs its own margin. The B.C. guide lays out the chain: your cost, then the price to a broker, the price to a distributor, the price to the retailer and finally the suggested retail price. It also advises building broker and distributor fees in from the start, even if you don’t use them yet. Otherwise, you face a large price rise later.
The guide notes that grocery retail margins typically range from 35% to 40%. However, health food stores and pharmacies may expect different margins, so ask each buyer before you finalize your price list.
Step 4: Run a worked example
Here is a simple supplement pricing model. Because the numbers are illustrative only, treat them as math, not a Welsdom quote.
| Line | Per unit |
|---|---|
| Manufacturing, as quoted | $6.00 |
| Inbound freight and duties | $0.70 |
| Fulfillment, fees and allowances | $1.30 |
| Landed cost | $8.00 |
| Wholesale price at a 50% margin | $16.00 |
| Retail price at a 40% retailer margin | $26.67, rounded to $26.99 |
| Your margin selling direct at $26.99 | about 70% |
Notice how the direct sale funds your marketing, while the wholesale sale leaves a thinner cushion. That gap is normal. But note that direct sales carry costs this model only partly covers, such as ads and customer service. So if the retail price lands above what shoppers pay for similar products, revisit the formula, the pack size or the channel, not just the margin.
Step 5: Stress-test for hidden costs and the second run
First, the B.C. guide lists hidden costs that eat into wholesale deals:
- Listing or slotting fees that retailers charge to stock new products.
- Cash discounts such as “2/10 net 30”, where the retailer takes 2% off for paying within 10 days.
- Product liability insurance, which most retailers require.
- Promotional allowances, sometimes several times a year.
Next, check your second run. Small first runs cost more per unit, because setup, testing and labelling are spread over fewer units. Our startup page notes that per-unit pricing decreases as order quantities increase. So set your supplement pricing for a realistic reorder size, then treat the first run as a test with a thinner margin. Our post on what MOQ means explains how order size moves the unit cost.
Supplement pricing mistakes to avoid
- Pricing from the factory quote alone. Freight, fees and returns are real costs.
- Confusing markup with margin. A 50% markup leaves a 33% margin.
- No room for a retailer. If your direct price can’t absorb a retail margin, wholesale will never work.
- Never revisiting prices. BDC suggests reviewing prices regularly as costs change, often during annual budgeting.
- Racing to the bottom. Competing on price alone is hard for a small brand. Compete on formula, format or story instead.
If you sell on Amazon, add referral and fulfillment fees to Step 1. Our guide to selling supplements on Amazon covers that channel.
Related guides
- Cost to launch a supplement product in Canada: the one-time costs that sit above your unit cost.
- What MOQ means in private label manufacturing: how order size changes your price per unit.
- How to scale a supplement brand from 100 to 10,000 units: plan the runs that bring your cost down.
Frequently Asked Questions
How do I calculate supplement pricing?
Start with your landed cost per unit, including manufacturing, freight, duties, fulfillment and fees. Then divide that cost by one minus your target margin to get your selling price. Repeat the step for each layer, such as a distributor or retailer.
What is a good margin for a supplement brand?
It depends on your channel and costs. BDC notes that niche companies with lower sales have posted gross margins of 60% or more, while high-volume sellers may run much thinner. Check that your margin still covers marketing after every fee.
What is the difference between markup and margin?
Markup is profit divided by cost. Margin is profit divided by the selling price. A product that costs $10 and sells for $15 has a 50% markup but only a 33% margin.
What margin do retailers expect?
The B.C. Ministry of Agriculture and Food’s guide says grocery retail margins typically range from 35% to 40%. Other store types may expect different margins, so ask each buyer.
Why is my first production run so expensive per unit?
Setup, testing and labelling costs are spread over fewer units on a small run. Unit cost usually falls as order quantities grow, so plan your long-term supplement pricing around your reorder size.
When you’re ready to get a real unit cost for your first run, request a quote on our startup OEM manufacturing page.