B&H: Cost Structure and Optimization Strategies for Supplement OEM Manufacturing

In recent years, China's nutrition and health industry has continued its strong growth, driving rapid expansion in the supplement OEM manufacturing sector. An increasing number of brands are shifting to "asset-light" models, relying on third-party factories to handle formulation, R&D, production, and packaging. At the same time, the cost structure behind OEM pricing has become one of the topics brands care about most. To help companies reduce production costs and enhance supply chain efficiency, B&H has provided optimization insights on supplement OEM manufacturing costs.

 

 

What Makes Up the Cost of Supplement OEM Manufacturing?

The cost and pricing structure of supplement OEM projects can generally be divided into the following categories:

 

1. Raw Material Costs (40%–60%) — the Core Factor That Determines Product Quality

 

• Raw materials account for the largest portion of supplement manufacturing costs, especially when using imported active ingredients such as CoQ10, astaxanthin, probiotics, and botanical extracts.

 

• Higher active-ingredient concentrations result in higher OEM pricing.

 

• Costs vary significantly depending on the source region of the materials.

 

• Functional products (e.g., immunity, cardiovascular health) typically bear higher costs than basic nutritional products.

 

B&H maintains raw material supply chains across Australia, China, and Canada. Through expert formulation adjustments, the company helps reduce unnecessary costs while preserving product quality.

 

2. Manufacturing & Processing Costs (15%–25%) — Closely Related to Dosage Form and Equipment

 

Different dosage forms require different production lines:

 

• Softgels: complex processes, medium-to-high cost

 

• Hard capsules: simpler processes, stable cost

 

• Tablets: lowest cost in large-scale production

 

• Gummies and liquid shots: newer formats with potentially higher costs

 

Smaller brands often misjudge budgets because they lack knowledge of manufacturing differences. B&H notes that selecting the appropriate dosage form can significantly reduce OEM supplement cost — especially for new brands, where "choosing the right format is more important than over-engineering the formulation."

 

3. Packaging Material Costs (10%–20%) — A Key Element of Brand Differentiation

 

Packaging items such as bottles, labels, cartons, blister trays, and shipping boxes vary greatly in cost depending on material and process:

 

• PET bottles vs. glass bottles

 

• Digital labels vs. offset-printed labels

 

• Custom designs vs. standard templates

 

Many early-stage brands do not need complex custom packaging. By using the "modular packaging library" from B&H, they can significantly lower packaging expenses.

 

4. Testing and Compliance Fees (5%–10%)

 

Most countries/regions require supplements to undergo mandatory testing:

 

• Microbiological testing

 

• Heavy metal analysis

 

• Stability testing

 

• Active ingredient content verification

 

• Registration/filing for export markets (e.g., Australia's TGA, China's cross-border filing requirements)

Different regulatory systems cause substantial fluctuation in OEM supplement manufacturing costs.

 

5. Management Fees and Production Loss Budget (Around 5%)

 

This category includes:

 

• Production loss

 

• Warehousing fees

 

• Quality control and management

 

• Equipment depreciation allocation

 

Although often overlooked, these costs can be reduced through lean manufacturing practices.

 

How to Optimize OEM Supplement Manufacturing Costs?

B&H Offers Expert Recommendations**

 

As a leading supplement OEM manufacturer, B&H provides six practical, supply-chain-based cost-optimization strategies.

 

Recommendation 1: Reduce Unnecessary Stacking of High-Cost Ingredients

 

Many brands combine numerous premium ingredients within one product, yet synergistic benefits may not exist.

 

Optimization approach:

 

Select 1–2 core ingredients + 2–3 supportive ingredients based on the product's functional positioning. This ensures efficacy while avoiding wasteful spending.

 

Recommendation 2: Choose "Fit-for-Market" Formats Instead of "Showcase Formats"

 

Examples:

 

• General adult supplementation → tablets or hard capsules (more economical)

 

• Beauty/nutricosmetic products → softgels or gummies (stronger consumer appeal)

 

• Sports nutrition → liquid shots or powders (easy to carry and absorb)

 

A suitable dosage form can reduce OEM pricing by 10–25%.

 

Recommendation 3: Plan Packaging Early to Avoid Low-MOQ Premium Costs

 

B&H recommends new brands adopt universal bottle molds + customized labels, upgrading to fully custom packaging only when sales scale up.

 

Recommendation 4: Leverage Multi-Factory, Multi-Regional Capacity Sharing

 

Coordinated GMP production across regions reduces waiting times, lowers minimum order quantities (MOQs), and improves total cost efficiency.

 

Recommendation 5: Prepare Annual Production Plans Instead of Last-Minute Orders

 

Urgent orders often raise OEM supplement costs. An annual production schedule helps optimize raw material procurement and packaging preparation.

 

Recommendation 6: Keep a 5–10% Cost Buffer for Market Fluctuations

 

Including:

 

• Raw material price increases

 

• International shipping adjustments

 

• Regulatory updates

 

A mature supply chain partner can provide better risk-mitigation capability.

 

Future Trends in Supplement OEM Manufacturing: Transparency, Globalization, and Digitalization

With increasing integration of cross-border supply chains, OEM supplement manufacturing will become more transparent. Three major trends are emerging:

 

1. Global sourcing and full traceability of raw materials become standard

 

2. OEM pricing structures move toward standardization

 

3. Smart manufacturing reduces labor costs and lowers defect rates

 

As a company connecting China with global supplement supply chains, B&H will continue promoting transparency in OEM pricing, cost optimization, and long-term sustainable product strategies for brands.