How to price supplements: work out the lowest price an order can carry, then check it against value, the shelf and retail
A markup on what the bottle costs leaves out the line that matters most when every buyer comes from an ad: in this post's example, the ad cost of one order is five times the bottle. Here's how to work out the lowest price an order can carry, check it against cost per day and the shelf, and price for retailers and honest comparisons.
On this page
- What one order has to pay for
- Work out the price floor
- Why a markup on the bottle's cost fails under paid traffic
- Check the floor against cost per day and the shelf
- Run the floor for each bundle
- How to price supplements for retail: wholesale, MSRP and keystone
- Show only comparison prices that are real
- Test the price, then rerun the floor
- Before you set the price
- Frequently asked questions
To price a supplement sold with paid traffic, add up what one order must pay for: the product, shipping, the ad cost of the sale and the profit you want. Divide that by what's left of the price after payment fees and refunds. The result is your price floor. Then check it against cost per day, what comparable products sell for and, if retailers will stock it, their margin.
Take a fictional one-month bottle. It costs $9 landed in your warehouse and $8 to pick, pack and ship. Payment fees take 4% of the price, and refunds and chargebacks 6% of revenue. Ads cost $45 for each order, and you want $10 of profit from each one. The floor comes out at $80, and this is where those $80 go:
Where an $80 bottle goes
Illustrative one-bottle order, priced at its floor
What one order has to pay for
Six numbers go into a price floor. Take each one from your own records where you can:
- Product. The landed cost of what the order ships: the bottle, packaging, freight and duty to your warehouse, not the supplier's quote. The landed cost post works it out line by line.
- Shipping and fulfillment. Picking, packing, the box and the postage for one order. If your payment fees include a fixed amount per order, add it here.
- Payment fees. The percentage your processor takes from the price.
- Refunds and chargebacks. A share of revenue, read from months whose guarantee window has closed. Treat a refunded order's bottle and shipping as spent: they stay in the lines above, and this share is only the money you send back.
- Ad cost per order. What you expect to spend on ads for each new order, from your store's own new-customer orders where you have them. The target CPA post shows which ad cost to plan against.
- Profit. What each order should leave once everything else is paid. Set it to zero and you get the break-even price, which is a warning line, not a price.
Work out the price floor
Fees and refunds are shares of the price, so they grow when the price does, and adding them as dollars gets the floor wrong. Divide instead:
The price floor
Price floor(product + shipping + ad cost per order + profit) ÷ (1 − fees − refunds)
Break-even price(product + shipping + ad cost per order) ÷ (1 − fees − refunds)
Break-even ROAS at a priceprice ÷ what the order leaves before ads
Illustrative: (9 + 8 + 45 + 10) ÷ (1 − 0.04 − 0.06) = 72 ÷ 0.90 = $80.00. Without the profit, 62 ÷ 0.90 = $68.89. At $80 the order leaves $55 before ads: break-even ROAS 1.45x.
At $80, fees and refunds take $8; at $100 they'd take $10. Each extra dollar of price keeps 90 cents. The calculator does the same sum, starting at the fictional bottle:
Calculator
Price floor calculator
The lowest price one order can carry: the product, shipping, fees, refunds, the ad cost of the sale and the profit you want from it.
- Break-even price (no profit)
- Break-even ROAS at that price
- Price ÷ product cost
Price floor = (product + shipping + ad cost per order + profit) ÷ (1 − fees − refunds). Fees and refunds are shares of the price, so they grow with it; the product and shipping of a refunded order are already spent.
The break-even price, $68.89, pays for the order and leaves nothing. The ROAS line says what $80 means for your ads: an order at $80 leaves $55 before ads, so the ads break even at a ROAS of 1.45 ($80 ÷ $55), and the planned $45 per order gives 1.78.
Now change one input at a time. Raise the ad cost to $60 and the floor jumps to $96.67. Cut the bottle's cost by a dollar and it falls only to $78.89. That gap is why a markup on the bottle's cost points you at the wrong number.
Why a markup on the bottle's cost fails under paid traffic
Cost-plus pricing multiplies what the product costs, and retail has a convention for it: keystone. A University of Nebraska–Lincoln Extension guide says retail price is typically two times the wholesale price, a 100 percent markup (UNL Extension). Monash Business School's marketing dictionary defines keystone as doubling the cost price, the same as a markup of 50 percent of the retail price (Monash).
Applied to the $9 bottle, keystone gives $18, which doesn't cover half the ad cost of one order. The floor in the example is 8.9 times the bottle's cost, and that multiple is a result of the floor, not a rule to set it by. Neither university source gives a figure for supplements.
No multiple carries over from one product to the next, because the ad cost doesn't follow the bottle's cost. Run two more fictional products through the same funnel, with the same $45 ad cost, $8 of shipping and $10 of profit. A bottle that costs $4 gets a floor of $74.44, 18.6 times its cost. One that costs $14 gets $85.56, 6.1 times. The second bottle costs three and a half times as much, and its floor is only 15% higher. So when someone quotes a normal markup for supplements, ask what ad cost it assumes.
Check the floor against cost per day and the shelf
A floor buyers won't pay is still a loss, so run two checks before you print the price.
Cost per day. Divide the price by the days a bottle lasts at the label's serving size: $80 for 30 days is $2.67 a day. It's a number a buyer can check and a script can state, as long as the days are real: 60 capsules taken two a day last 30 days, not 60.
The shelf. List the products your buyer would actually compare with yours, and note each one's price, servings and cost per day. Compare like with like: the same form and a similar amount of the main ingredients per day, not just capsule counts.
Here's that survey with three fictional competitors. Product A is 60 capsules for $39, taken two a day, with the same daily amount of the main ingredient as yours: $1.30 a day. Product B is 120 capsules for $69 at four a day, again the same amount: $2.30 a day. Product C looks cheapest, 30 capsules for $45 at one a day, or $1.50 a day on its label. But each capsule holds half your daily amount, so a buyer matching your dose takes two, the bottle lasts 15 days and the real cost is $3.00 a day:
Cost per day at the same dose
A fictional shelf, each product at the daily amount of the main ingredient in yours
At the same dose, the $80 bottle isn't the most expensive on that shelf, but a day of it costs twice what a day of product A does. When the floor sits well above the products buyers compare, the offer has to earn the difference with something the buyer can verify, such as a larger dose, testing or a stronger guarantee, and every reason you give has to be true. Or your costs have to come down. In the example the ad cost is the biggest lever: a VSL that wins orders at $30 instead of $45 takes the floor from $80 to $63.33, or $2.11 a day, under product B but still above A.
Each way of setting a price answers a different question. Start from the floor, check it against value, and treat the markup as a read-out:
Three ways to set a supplement price
Illustrative numbers for the $9 bottle
Start hereFunnel-first
Price ≥ what one order must pay for, divided by what’s left after fees and refunds.
- The $9 bottle: $80
- Counts the ad cost of each order
- Gives the break-even ROAS your ads must beat
The catch: it says nothing about what buyers will pay, and the ad cost is a forecast until ads run.
Check against itValue and shelf
Price against what the buyer compares: cost per day and similar products at the same dose.
- $80 for a 30-day bottle: $2.67 a day
- Matches how a buyer checks a price
- Tells you whether the floor can sell
The catch: a competitor’s price shows what buyers see, not what its orders cost.
A read-out, not a ruleCost-plus
Price = what the product costs × a multiple you pick.
- Keystone on the $9 bottle: $18
- Simple, and it matches the keystone convention in retail
- Leaves out the ad cost, the shipping and refunds
The catch: under paid traffic it can set a price below what one order costs to win.
Run the floor for each bundle
The floor is per order, and that changes the picture once you sell bundles. The ad cost and the shipping are paid once per order, however many bottles it holds. Put a three-bottle order into the calculator: $27 of product, $8 of shipping if the box still costs that to send, the same $45 ad cost and $10 of profit. The floor is $100, or $33.33 a bottle, against $80 for a single.
At that floor, three bottles last 90 days at $1.11 a day. Quote a number like that only beside the bundle it belongs to: next to the single bottle, which costs $2.67 a day, it understates what that buyer pays.
A subscription renewal is the other extreme. It has no ad cost at all, so its floor in the example is $30, and that's the room a subscribe-and-save price has on renewals; the first order still carries the ad cost.
So a single bottle and a six-pack don't need the same price per bottle, and they don't do the same job in the offer. The bundle pricing post works out how far apart the tiers' prices should sit.
How to price supplements for retail: wholesale, MSRP and keystone
A retailer buys at wholesale and sets its own price. Even the manufacturer's suggested retail price is only a suggestion; in the FTC's words, "The key word is 'suggested.'" A dealer can sell at the MSRP or at another price as long as it decides on its own, and a manufacturer may choose not to deal with distributors that don't follow its MSRP (FTC).
So your revenue is the wholesale price, not the number on the shelf, and you price back from the shelf. Nebraska's guide gives the formula: wholesale price = retail price (including shipping) ÷ (100% + markup %). At keystone that's half, so a bottle meant to sell for $40 earns you $20:
Where a $40 shelf price goes at keystone
Illustrative: a retailer buying direct at $20 wholesale
- Retailer’s margin, half the shelf price$20.0050%
- Product, landed$9.0023%
- Freight and handling to the retailer$0.902%
- Left for the brand, before marketing$10.1025%
Set that beside the $80 direct order. Both leave about $10 a bottle, but not the same kind of $10. The direct order's is what's left after the ads have been paid. The retailer's $10.10 still has to pay for whatever makes a shopper pick your bottle off the shelf. At keystone, every dollar you want to keep adds two to the shelf price: $5 more a bottle needs a $50 shelf price, which leaves $15.10.
Selling in both places adds a check: buyers can set your site's $80 beside the shelf price, and the retailer sets that price, not you. Give your own site what a single bottle on a shelf can't offer, such as bundles or a subscription.
Holding retailers to a minimum price is the legally delicate part. The same FTC guide says that since a 2007 Supreme Court decision, federal law judges minimum resale price policies by a rule of reason, while some state laws treat minimum price rules as illegal per se. The guide discusses minimum advertised prices inside cooperative advertising, where a manufacturer has "considerable leeway" over ads it helps pay for. That leeway has limits: the FTC challenged the policies of five large music distributors, which barred discounted prices even in ads the retailer paid for itself and covered more than 85 percent of market sales. This isn't legal advice: have a lawyer review any retail price policy before you send it out.
Show only comparison prices that are real
The prices you put next to yours are claims too. Under the FTC's Guides Against Deceptive Pricing, a former price is a legitimate basis for a comparison if it's the actual, bona fide price at which you offered the product to the public on a regular basis for a reasonably substantial period of time (16 CFR 233.1). A manufacturer's list or suggested price may be advertised as a comparison if a number of the principal retail outlets in the area regularly sell at it, while a list price well above the highest price at which substantial sales are made in the area risks misleading buyers (16 CFR Part 233).
Apply that to the example. If the bottle has sold at $80 since launch, $80 is its regular price, and a "was $120" beside it has no history behind it. It would be a legitimate comparison if you had really offered the bottle at $120 to the public, regularly, for a reasonably substantial period before the cut. A $120 set up only so that $80 looks like a cut is the fictitious kind the guide describes. For a brand that sells only on its own site, an MSRP or a "retail value" nobody charges is fictitious too. The price anchoring post shows honest anchors, with the math.
Test the price, then rerun the floor
A floor tells you the lowest price that works on paper. Whether buyers pay it is a test. Split traffic between prices at the same time, rather than comparing this month with last, and judge them by contribution per visitor, not conversion rate: a lower price can win more buyers and still leave less money (price testing). In RevvyScales, offer variants inside one VSL, prices and bundles included, are on the Growth plan and up, each shown by weight and kept the same for each viewer (offer split test).
Then recheck what the floor rests on. The ad cost was a forecast: after a few weeks of spend, put the cost your store actually records into the calculator, and do the same whenever the product, the shipping or the refund rate moves.
Before you set the price
Work through this with your costs, your ad plan and three comparable products open:
Before you set the price
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Frequently asked questions
What is a good markup for supplements?
There's no honest universal number, and neither university source on keystone pricing gives one for supplements. Keystone, doubling the cost, is a retail convention for the retailer's markup on wholesale. For a brand that sells with paid traffic, the markup is an output: work out the price floor from your costs and your ad cost per order, then read the multiple. In this post's example it's 8.9 times the bottle's cost, and the same funnel gives 18.6 times on a $4 bottle.
Should I price a supplement per bottle or per serving?
Charge per bottle or per bundle, because that's what ships, and show the cost per day or per serving beside it as the comparison a buyer can check. Work it out from the label's serving size and the real number of days a bottle lasts: 60 capsules taken two a day last 30 days. Compare products at the same daily amount of the main ingredient, not per capsule.
How do I price a supplement before I know my ad cost?
Plan with a cautious ad cost per order, from a test budget, a similar offer you've run or the most you could afford to pay, and set the floor from it. Then recompute it with the cost your store actually records once ads have run for a few weeks. A floor built on a hopeful ad cost puts you below break-even without telling you.
How much can a supplement subscription be discounted?
Work it out from two floors. A renewal carries no ad cost, so in this post's example its floor is (9 + 8 + 10) ÷ 0.90 = $30. The subscription's first order still carries the ad cost, so on its own it has to clear the full floor, $80 here, or the renewals that follow have to pay it back. Whatever the discount, state the terms clearly before checkout.
Can I show an MSRP if I only sell on my own website?
The FTC's pricing guides let you advertise a manufacturer's suggested price as a comparison if a number of the principal retail outlets in the area regularly sell at it, and warn that one well above the price at which substantial sales are made risks misleading buyers. If you sell only on your own site, nobody charges that price, so calling it the regular price is a fictitious comparison. A former price you really offered to the public, regularly, for a reasonably substantial period is a legitimate basis for a comparison.
Can I require retailers to sell at a minimum price?
The FTC's guide says that since a 2007 Supreme Court decision, federal law judges minimum resale price policies by a rule of reason, while some state laws and international authorities treat them as illegal per se. A manufacturer may adopt a policy on its own and stop dealing with retailers that ignore it; competitors agreeing on prices is unlawful. Have a lawyer review any retail price policy before you use it.
Sources
- Introduction to Pricing for a Product or Service (EC496) — University of Nebraska–Lincoln Extension
- Keystone Markup — Monash Business School marketing dictionary
- Manufacturer-imposed Requirements (Guide to Antitrust Laws) — FTC
- 16 CFR Part 233: Guides Against Deceptive Pricing — eCFR
- 16 CFR 233.1: Former price comparisons — eCFR