The inner workings of the supplement industry aren’t publicized, so very little common knowledge about how it operates has percolated into common parlance.
So if you’re new to the industry you’re not going to have a lot of useful information to fall back on.
In fact, if you’re reading this, I’d be willing to bet the following apply to you:
- You’re looking to get started in the industry for the first time.
- You’re not quite sure what you’re supposed to know, and are having a hard time turning over new leaves.
- You’re a little apprehensive about investing large amounts of capital, either because you don’t have any or because your ignorance is putting a dimmer switch on your animal spirits.
You can probably get by with having two of these conditions apply to you, but not all three. Being broke and dumb is not a good starting condition for successfully starting a business.
I can’t help you with your finances, but I will give you a brief run down on how to at least give the impression to others that you know what you’re doing with your supplement.
My guess is that if you internalize all the points talked about in this article you’ll be ahead of about 85% of people who are trying to get their supplement manufactured.
It’s always a good idea to know what you’re doing, but it’s absolutely paramount if you’re new and have limited capital. People starting a new product are usually salivating over the marketing claims they want to make (organic, whole foods based, Non-GMO, etc), but usually haven’t a clue what it actually takes to make those details come to fruition. It’s a lot of work. And if you don’t have much money your manufacturer won’t be very interested in going the extra mile to make it work for you. Half the time they won’t even know themselves.
Lots of people complain about how they can’t get manufacturers to call them back. If most of these people knew how they looked to others with their combination of meager capital, lofty ambitions, and limited knowledge they wouldn’t blame them for running in the other direction. No one’s going to make a lot of money off your 1,000 bottle run. Shopping for a manufacturer isn’t like walking into JC Penney’s. It’s an industrial business, not a consumer one, so you shouldn’t base your expectations for one based off the other.
Probably the only way people are going to give you the time of day is if you can credibly demonstrate that you know what you’re talking about. Otherwise you’re just a know-nothing fool who’s wasting everyone’s time.
So, dear prospective entrepreneur, do yourself a favor and read every f******* word in this article very carefully. You’ll be glad you did.
So with that said, here are the details you have to have nailed down before you start contacting others.
What Container Are You Looking To Use?
The most common is a white plastic, HDPE bottle. Practically every manufacturer carries these and this won’t add anything to your costs. HDPE is a particular type of plastic that’s made without a variety of compounds that are typically damaging to the environment: bisphenol, phthalates, BPA, etc. It’s the standard for the supplement industry.
Other popular options are amber glass (good for reducing sun exposure), stick packs, and sachets. Using glass will mean higher unit costs. Stick packs and sachets are for individual servings and are more labor intensive. If you want those be prepared for minimum runs of at least 5,000 units.
The volume of a jar is measured in CC’s, which stands for cubic centimeters. 30 servings of powder will typically come in a 600-800 cc jar, to give you a frame of reference. Incredible Greens uses a 700 cc container which is pretty typical.
You also have to decide if you want to have a shoulder or no shoulder. A jar with a shoulder protrudes from the side past the lid like this:
You can also specify the color of your lid.
Will You Be Providing Labels Or Not?
Some manufacturers print labels for you and include it in your cost. Others don’t. This is a good question to ask a manufacturer in the beginning so you can know if you have to find a label printer.
What’s Your Target Price Point?
This helps because it allows the manufacturer to make recommendations for your formula if it’s too high, and it also incentivizes them to look harder for the best price.
Of course, it’s important to make sure it’s roughly accurate in the first place. If your demands are irrationally high people will just ignore you because they’ll think you don’t know what you’re talking about.
And they’ll be right. Irrationally high demands are one of the best indicators that someone doesn’t know what they’re talking about.
So let me introduce you to your new best friend: The Formula Analyzer. I specifically made it to help newbie’s from tripping over their own feet. Go through the Suppliers section, plug in some numbers, and get a feel for how much your costs will be. It’ll never exactly match what your manufacturer gives you, but it should be pretty close.
Having an accurate back-of-the-envelope guess for what your product should cost is a great way to begin a discussion about a new project.
What Size Run Are You Looking To Do?
Manufacturers vary wildly in what they’re willing to do. There’s no set rule……it really all just depends.
In general the bigger your run the easier it’ll be to find someone to work with. That’s common sense. Any run requires a fixed amount of work, so a lot of the man hours are the same no matter how many bottles are being made.
That being said, you do have options if you want to start small. It’s not difficult to find manufacturers with a 1,000 bottle minimum, and there are a few that have no minimums at all. Go to the suppliers section of the formula analyzer to find some of them.
Small runs will have higher prices than larger ones. Like I said, there are fixed costs. It’s a volume-based business. That’s just a fact of life so you have to get used to it.
If your formula is complicated, there’s a good chance your small run will have to be made very close to your target selling point. That sucks, but it is what it is. Life’s hard. Wear a helmet.
Is Your Product Currently In Production or Is It New?
When you start a new with a manufacturer your first run takes longer than your subsequent runs. That’s because there’s an R&D process in the beginning that typically takes 3-4 weeks. If your product is already in production this will likely be shortened since they already know what they’re aiming for.
If the product is new, and if it requires flavoring then you ought to be prepared for it to take a while, especially if you have ingredients that are difficult to mask.
You’ll also probably have to pay a non-refundable R&D payment upfront. That’s normal and you shouldn’t bitch about it if it’s less than $1,000. There are genuine upfront costs to developing a product and your manufacturer will have to front some money for ingredients, flavoring, and skilled labor to get the ball rolling.
Most of the time they’ll roll over unused money into your payment for the run.
You should think of this like earnest money when you make an offer on a house. The $500 or $1,000 signals that you’re serious and not a tirekicker.
What Label Claims Do You Want To Make?
What is it that you want to brag about on your label?
Organic? Non-GMO? Gluten-Free? Those are label claims.
It’s very important that you make these clear at the beginning of the process and not the middle or end. These claims affect how you source the ingredients. If you decide halfway through that you want to be organic the manufacturer might (justifiably) charge you for all the ingredients they bought on your behalf that weren’t organic since you didn’t tell them.
Or ask for more R&D money. And the time to production will most definitely be delayed by a few weeks.
The different claims vary in their level of complexity. Organic is toughest because it’s a positive qualifier, which means that you have to deliberately go through a certain process in order to qualify, and this has to apply to every single ingredient.
Gluten-Free, Soy-Free, Non-GMO etc, are negative qualifiers, which means it just has to not have certain things inside them for it to count. Organic is like climbing a mountain. Non-GMO is like stepping around puddles.
In general you should assume that every claim you want to make will increase your costs. Going organic definitely means you’ll have to pay 25-30% more.
The others vary depending on your formula.
Will You Be Using Flavors?
Flavors are an interesting can of worms.
They’re very expensive, and they can often make-or-break your product.
Again, let me repeat: they’re very expensive!
Their use can really jack up your costs, and what makes them more difficult is that it’s hard to forecast how much you’ll need until you start testing. There are a variety of ingredients that just taste really, really bad and require a lot of masking to overcome.
For many projects the inclusion of flavoring is THE big wild card with regards to how the product will actually turn out.
With flavors there are three important dimensions to be mindful of:
- Natural vs. Artificial. Artificial flavors are stronger and less expensive. Of course consumers have negative mood affiliations with artificial flavoring.
- GMO vs. Non-GMO. Most flavors are made with corn, which by default is a GMO ingredient. If you want your product to be certified Non-GMO you have to use Non-GMO flavoring which will increase your costs.
- Flavoring, boosting, masking. Flavors do just that: add some sort of flavor to something. Boosters are used to increase the sensation of sweetness without actually having to add sugar. Masking is used to hide off-notes produced by other ingredients. Boosters and maskers are the most expensive type.
So if you add all this up, it’s possible your projected ingredient costs could go up quite a bit by the time you’re finished. This is especially true if you insist on using any sort of herb that has biological activity. They almost always produce strong off-notes which take an avalanche of flavoring to cover up.
Will You Use Desiccants?
Desiccants are small packets that have xyz inside of them. They help preserve moisture and rancidity once a bottle is opened and prolong shelf-life.
They’re a small detail, but it needs to be covered nonetheless.
However, the choice of “to desiccant or not to desiccant” can happen pretty much anytime before the final run without causing any sort of collateral damage.
What’s Your Intended Form?
These are your choices:
- Effervescent (ie, something that fizzes when you put it in water)
Capsules and tablets are the easiest, since there’s no flavor and they’re the most common. The blending process for a tablet or capsule is a little more intensive than powders, but otherwise they’re the easier product to develop.
Powders are better for absorption, can have larger serving sizes, but also have less stability and often require the inclusion of flavors since they have to taste good.
Effervescents are a little more tricky and it’d probably be best to find a manufacturer that specializes in them.
Liquids are the most difficult. They’ll have higher order minimums and are generally not the best choice for someone just getting started. You should plan on having at least $50,000 to begin.
What’s Your Intended Serving Size?
If you’re making a powder this won’t matter much, unless you specifically want to have a specific sized bottle for the product to fit into.
But for tablets and capsules this is an important detail because capsules can only hold about 750 mg of product, and tablets about 1 g.
Occasionally you’ll find an unethical manufacturer that’ll promise you more than this amount but that’s not true. They hold about that much.
How Much Water Do You Want to Mix It Into?
You have to include Instructions for Use on your label. If you’re making a powder or tablet this means you’ll have to mix it into water.
So what amount should you mix it into? It’s really your call.
It’ll partly depend on how large your serving size is, and also on how much flavoring you’re willing to pay for. This is an important detail for the product development process.
Know Exactly How You Want the Formula To Read on the Label
It’s a good idea to know how you want your formula to appear on the label and to make this clear when you submit your quote.
Your manufacturer will be as picky as you are. If you don’t stipulate with regards to form they’ll just use whatever they have in stock. A lot of times that’ll be fine, but this usually won’t do when you want to make particular label claims.
For example, if you want to use vitamin D in your formula and also want it to be vegan you’ll have some interesting choices to make. The easiest form of vegan vitamin D to source is ergocalciferol……..but that’s junk.
The better kind of is D3, but that’s typically sourced from animals. If you want to have vegan D3 you’ll have to get a proprietary ingredient that’s made from Vitashine. That’s a lot more expensive and will likely require you to buy it upfront, possibly adding a few thousand dollars to your startup costs.
There’s a bit of a tight rope to walk with these sorts of details, so having a cursory understanding of what exactly it is that you want will be better for everyone.
That being said the pickier you are the more prepared you have to be in order to grind through the supply chain to find what you want.
In general it’s easy to source an ingredient, but quite challenging when you want to make sure it only comes from certain sources.
And that’s basically where the industry is headed. For lots of ingredients overall sales are down, but where sales are really showing growth is for ingredients that are specifically made from a certain source, or perhaps more importantly, not made from a certain source.
People are getting pickier and pickier about where their food comes from.
Getting these details right is usually time consuming and expensive. It’s often a good idea to assume that a patented ingredient will cost 5-10x as much as an unpatented kind. Sometimes more. I’ve seen it as much as 100x more.
So be prepared.
Okay guys, if you heed this advice you should be in good shape.