How Do You Price a Private Label Supplement or Skincare Product? Cost per Unit, Margins for Amazon, Retail and DTC

Short answer

Start from your landed cost per unit, then work backward from the shelf price, channel by channel. Through a retailer and a distributor, you usually keep only about 35% to 52% of the shelf price. On Amazon, the referral fee in beauty, health and personal care is 15% on items over $10, before fulfillment fees. On your own site, card fees on Shopify's Basic plan are 2.9% + 30¢. Set one shelf price that still leaves you a healthy margin in your worst channel. ^[1][2][3][4]

Pricing a private label product means turning your manufacturing cost into a shelf price that covers every channel's cut (retailer, distributor, marketplace or payment fees) and still leaves a gross margin that pays for marketing, storage and reorders.

What goes into your cost per unit?

Price from your landed cost: everything it takes to get one finished unit to your door, not just the manufacturer's quote.

• Manufacturing: formula, ingredients, filling and labor. At PMG, a 10,000-unit second run of a supplement typically lands at $1.50–$3.50 per unit. ^[5]
• Packaging: bottle, jar or tube, closure, label and box. At PMG, a simple stock label runs $0.15–$0.30 per unit; custom bottles, tamper seals or specialty closures run $0.50–$1.00. ^[5]
• One-time costs spread across the run: label design, testing and any formula work. A first private label supplement batch of 2,000 units at PMG typically totals $7,000–$14,000, or about $3.50–$7.00 per unit, once those are included. ^[5]
• Freight in from the manufacturer to your warehouse or Amazon.

Your first run almost always costs more per unit than your reorders. Price for where your cost will be at your second run, not your first, or you'll be stuck at a price you can't support later. See how much it costs to manufacture supplements for the full cost breakdown.

Margin or markup: which one are you looking at?

They are different numbers, and mixing them up is the most common pricing mistake.

• Markup is profit as a share of cost. A $5 item sold for $10 has a 100% markup.
• Gross margin is profit as a share of the selling price. That same item has a 50% margin.

Retailers and distributors quote margin. Keystone pricing, a 100% markup on wholesale, gives the retailer a 50% margin. ^[4]

How much do you keep in each channel?

Here is one product at a $29.99 shelf price with a $4.00 landed cost. The $4.00 is an example inside PMG's typical cost ranges, not a quote. ^[5]

The retail line is the one that surprises founders. Across typical retailer margins of 35%–50% and distributor margins of 20%–30%, you receive only about 35% to 52% of the shelf price: $10.50 to $15.59 on a $29.99 product. ^[3] Retail usually also asks for promotional spend, often 10%–15% of revenue, and some chains charge slotting fees per SKU. ^[3]

How do you set one price that works everywhere?

Most brands keep the same shelf price everywhere. If your website undercuts the store shelf, the retailer will notice. So set the price from the channel that leaves you the least:

1. 1.Pick the hardest channel you plan to sell in in the next 12 months. If retail is on the plan, that's usually retail.
2. 2.Find what you receive there: about 35%–52% of shelf price for retail through a distributor, or about 85% for Amazon before fulfillment and ads. ^[1][3]
3. 3.Decide the gross margin you need at that level. It has to cover marketing, storage, returns and reorders.
4. 4.Solve for the shelf price, then check it against what competing products sell for. If the shelf price comes out higher than the market will pay, the fix is usually cost (packaging, run size, format), not a thinner margin.

The Price Ladder: 5 rungs from cost to shelf

1. 1.Landed cost: manufacturing, packaging, one-time costs spread across the run, and freight in.
2. 2.Your selling price: what you charge the distributor, retailer or customer.
3. 3.Channel cut: distributor margin, retailer margin, Amazon referral and fulfillment fees, or card fees.
4. 4.Growth costs: ads, promotions, samples, chargebacks and storage.
5. 5.What's left: the profit that pays for your next, larger run.

Ready to price your product? Start a Project →

How do you lower your cost per unit without cutting quality?

• Order the run size you can sell through. PMG's per-unit costs typically drop 30%–50% on a larger second run. ^[5]
• Start with a stock formula. Private label stock formulas start at 1,000 units per SKU at PMG, with custom formulas typically from 5,000 units. ^[6]
• Use stock packaging first. At PMG, custom bottles, tamper seals or specialty closures run $0.50–$1.00 per unit, against $0.15–$0.30 for a simple stock label. ^[5]
• Launch fewer SKUs. One or two products at a better run size often beat five products at the minimum. See MOQ and manufacturing volume.

Printable checklist: before you set your price

Download the fillable checklist (PDF)

• Landed cost per unit includes packaging, one-time costs spread across the run, and freight in.
• Expected cost per unit at your second run is estimated.
• Every channel for the next 12 months is listed (website, Amazon, retail, distributor).
• What you receive per unit is worked out for each channel.
• Amazon referral fee, FBA fulfillment and storage fees, ads, and your selling plan (monthly or per-sale) are included, if you sell on Amazon.
• Card fees and shipping to the customer are included, for your own website.
• Retail promotions, free fill and chargebacks are budgeted, if retail is on the plan.
• Gross margin in the hardest channel covers marketing and reorders.
• Shelf price is checked against competing products.
• The same shelf price is used in every channel.

How PMG helps

Price from real numbers: ask PMG for a per-unit quote before you commit. Typical first runs cost $5,000–$25,000 for stock formulas and $25,000+ for custom formulations; private label launches take about 60–90 days, and custom formulas 4–6 months. ^[6] See our product formats and minimums, or start a project and ask for a per-unit quote at two run sizes.

Frequently asked questions

Glossary

• Landed cost: the full cost of one finished unit delivered to you.
• COGS: cost of goods sold, the direct cost of the units you sell.
• Markup: profit as a percentage of cost.
• Gross margin: profit as a percentage of the selling price.
• Keystone: shelf price set at double the wholesale price.
• Wholesale price: what a retailer or distributor pays you.
• Referral fee: Amazon's percentage of each sale.
• Slotting fee: a fee some retailers charge to place a new item on the shelf.
• Chargeback: a deduction a retailer takes from your invoice when a shipment misses its rules.

This article is general information, not financial advice. Check current fees with each platform before you set prices.