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Factors Affecting the Cost of Manufacturing Dietary Supplements

Factors Affecting the Cost of Manufacturing Supplements

Consumer demand for high-quality dietary supplements continues to increase as consumers are placing more emphasis on self-care than ever before.

With an annual growth of 4.5 percent, health stores have been thriving. Additionally, online supplement and vitamin sales are growing annually at a rate of 12%. In total, these sectors account for approximately $30 billion per year. This steady rise in demand for supplements serves as an attractive opportunity for current and aspiring brand owners to cash in on the supplement industry.[i] [ii]

If you’ve considered the above facts and want to know the cost of starting a supplement company, you have to learn about the various hidden costs of manufacturing high-quality products.

You Get What You Pay For - Select Your Supplement Contract Manufacturer Wisely

If you are opting to hire a contract manufacturer, the decision you make will impact the future of your supplement line, and how much it will cost to get your supplement manufactured. It’s important to realize that the price of your project and production time, although important, cannot be the only factors taken into consideration while choosing your contract manufacturer. Not only will choosing the cheapest price quote and shortest lead time estimate damage your company’s reputation, but it will also cause a ripple effect that can run your product out of the market.

The term “value for money” applies in a very literal sense in the supplement industry. A contract manufacturer that offers you the cheapest price quote and shortest turnaround time should never be your first choice!

Supplement Manufacturing Quote from Vincent Tricarico

Here’s why:

Some manufacturers utilize lab facilities that fail to meet GMP standards. It typically takes anywhere between 12-16 weeks from the date a purchase order is received for a GMP-compliant supplement to be produced. Factors that affect this lead time include the amount of time it takes to order raw materials and for them to arrive.[iii]

There are contract manufacturers that use inferior-quality raw materials. For instance, they may claim to use ingredient A in your product but use ingredient B instead. They might even use cheaper substitute ingredients or resort to spiking or “watering down” your product with ingredients that they may not list on your product label. If your product is tested and found guilty of this, you put yourself at the risk of clashing with the FDA, and that is something you want to steer clear of.

A shorter estimated lead time can be a method to acquire your business. Sometimes, manufacturers fail to fulfill the promised deadline, and it subsequently causes a domino effect. Production delays affect time to market (TTM) or your ability to launch the product in the market. This, in turn, affects your ability to generate revenue and could destroy relationships with retail partners and other distributors.

If your label is found on a product that customers consider unreliable, your brand name will suffer the consequences. Once you lose the trust of your customer, chances of recovering it are non-existent due to the competition in the market.

Your primary responsibility as a brand owner is to provide your customers with the highest-quality supplements possible. Everything from the ingredients used in your formula to the packaging used for your product must be top-notch.

Now, let’s look at the other factors that affect the pricing of dietary supplements.

Factors That Affect the Pricing of Dietary Supplements

Dose Form

The way a supplement is manufactured plays a significant role in its final cost.

For example, supplements manufactured in tablet form have a lower cost of manufacturing than capsules. But, these have certain drawbacks like being harder to digest due to the addition of fillers and binders. Although capsules are better than tablets, liquid supplements that tend to be more expensive are preferred over them. This is because liquid supplements are better absorbed and don’t use additives.

So, each dose form, whether tablets, liquids, capsules, or powders have their pros and cons and are likely to affect the manufacturing cost.

Raw Materials

Supplement prices can vary drastically depending on the origin (synthetic or natural) and seasonality of the ingredients. Synthetic ingredients have lower production costs and eliminate the need to manage natural sources from which the functional principles are to be extracted. Nevertheless, synthetic raw materials cannot match the quality of natural raw materials.

The bio-availability or seasonality of the raw materials in the product is another factor that can influence the final cost of your project. Plus, most natural ingredients will not be available throughout the year, or their prices might increase during certain months, such complications also affect a supplement’s manufacturing cost.

Ingredient Sources

Ingredients developed after years of research and economic investments to provide substances with better quality, efficacy, and higher absorption rate than the ones available in the market are likely to cost more. Let’s look at a few examples:

  • Glucosamine (a common ingredient found in bone and joint support products) derived from sharks is expensive compared to products made from bovine sources.
  • Calcium carbonate is cheap and abundant, but some research studies show that its costlier substitute calcium citrate may be better absorbed in the body.

Consequently, if you are planning to incorporate ingredients like these in your supplement, the cost of manufacturing will go up. This also implies that your final product will be technologically advanced and better than most in the market. And the cost will be reflected in the final price of your supplement to recover the investments required to develop them.

Supplement Packaging

Some ingredients are sensitive to air, light, different temperatures, and require very product-specific packaging and formats. Such formats that differ from the standard packaging tend to be expensive. Manufacturers looking to cut down their costs will strive to obtain an altered supplement containing different ingredients that can make the product less safe and effective but easier to pack.

Regardless of whether you’re selling your product exclusively online or in retail outlets, you need to select a packaging format that will protect your product when it’s shipped and will maintain its freshness while being stored or on a product shelf.

Branded Ingredients

Utilizing patented ingredients over the standard ones can also contribute to a higher manufacturing cost. These products guarantee that specific compounds or strain produced work better than standard ingredients. For example, ingredients like FloraGlo (lutein) and BC30 (probiotic strain) cost more than standard ingredients.

Testing and Certifications

Specific ingredient verification processes are costly. 3rd party ingredient testing and certifications like getting a product USP certified will undoubtedly drive up the price. But at least consumers will be assured that they are not buying questionable, low-quality products.

Even producing supplements that are organic, allergen-free, vegan, kosher, etc. require the appropriate certifications and testing. Your production costs may go up or down depending on these factors too.

Infographic - Factors That Affect the Price of Dietary Supplements

Conclusion

Consumer awareness regarding health and wellness is on the rise, and consequently, the demand for high-quality supplements is rising, too.[iv] Both indicate that consumers are willing to pay extra for the right quality products. Hence, as a brand owner, now is an excellent time to bring high-quality dietary supplements to the market. For that, you need to partner with an experienced supplement manufacturing firm that will provide you with industry insights and tips to help develop a supplement that’ll stand out in the competitive markets.

At NutraScience Labs, our team possesses over 50 years of award-winning nutraceutical industry experience. As your supplement contract manufacturer, we'll work with you every step of the way to create your dietary supplement product from scratch or modify your existing formula. We also offer in-house packaging, labeling, and fulfillment services to help save you time, money, and stress.

Join the more than 5,000 dietary supplement brand owners that have selected us as their contract manufacturer. Call 855-492-7388 to speak to one of our knowledgeable and friendly representatives or send us your request to receive a free manufacturing price quote.


References:

[i] https://www.ibisworld.com/united-states/market-research-reports/health-stores-industry/

[ii] https://howtostartanllc.com/business-ideas/supplement

[iii] https://www.nutrasciencelabs.com/blog/why-choosing-a-faster-and-cheaper-supplement-manufacturer-doesnt-work

[iv] https://www.globenewswire.com/news-release/2020/03/31/2009328/0/en/Global-Dietary-Supplements-Market-to-Surpass-US-290-9-Billion-by-2027-owing-to-rising-awareness-of-its-health-benefits-Says-CMI.html

June 9th, 2020

About the Author:

 
Vincent Tricarico

Vincent Tricarico is currently the Vice President of Contract Manufacturing at NutraScience Labs. With nearly 20 years of direct-to-consumer and business-to-business experience, Mr. Tricarico is a respected executive in the dietary supplement industry and is well-known for his ability to consistently build and grow successful teams that produce results. Over the years, his work has been published in many industry trade publications, such as Natural Products Insider, Nutritional Outlook, and WholeFoods Magazine.