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Calculating The Cost Of Starting A Supplement Company

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Starting your own business is something you should be proud of. You’ve found a problem in the health and nutrition market and you came up with a solution for it. However, getting your product from the ideation stage and into the hands of a customer requires a lot of planning and investing in your business. 

Having started our own business and worked with thousands of products over the past decade, Insurance Canopy knows most business owners may be unaware of costs that lie ahead. We want to help you grow a successful nutraceutical business, so here are 8 steps to help you calculate the cost of starting a supplement company—including supplement company insurance cost.

A woman is calculating the cost of starting a supplement company on her computer.

Step 1: Create and register your business name

Estimated costs: $100–$800

Branding your business with a name can be tricky. You want it to be memorable while still being informative to the customer. If you need some help, check out this Supplement Store Business Name Generator.

Once you have your name picked out, it’s time to register it with your state. If you are operating your business under something other than your name, you will need to register it as a DBA (doing business as). You will typically pay less than $100 for this, but it varies by state. This simply means you have registered your business name.

If you want to make your business its own legal entity, such as a corporation or LLC, you will also do this through your state. Registering as an LLC gives you some liability protection if you are sued, trademarks your business name, and keeps your business affairs separate from your personal affairs. The cost of registering your business name is typically included in this price, too! You can expect to pay several hundred dollars to form a new business entity.

You can go the extra mile and trademark your business name to help prevent others from using the same or similar business names. This helps to better protect your business from shady competition and set you apart in the marketplace. If you plan on expanding your business nationally, or even internationally, you should highly consider a trademark. This can be done through the U.S. Patent and Trademark office and has a non-refundable fee of $375.

A man is setting up his supplement business website after buying supplement product insurance.

Step 2: Obtain permits and licenses

Estimated costs: $350

In order to legally sell your supplements, you need to obtain FDA approval with food and drug permits. Failure to do so can result in large fines, legal fees, and even cause your business to shut down. You can use this FDA resource, “How to Start a Food Business,” to help you learn more about each of the permits and licenses you may need.

You will also need to apply for a free EIN (employer identification number) from the IRS and register for state and federal taxes. This helps to ensure you are doing business legally and avoid the consequences of tax evasion and fraud. While you are at it, you will want to open a business bank account so you can collect revenue and keep track of your business expenses. This helps to keep your business assets separate from your personal assets, such as your home and car.

Step 3: Website creation and maintenance

Estimated costs: $200, plus monthly payments

Now that you have your business name registered, it’s time to make a website. This is where you showcase your business, sell products, and direct your marketing efforts to. Start by registering a web domain name—we recommend Google Domains or GoDaddy. As long as you pay for the domain, you are able to use it for your business. If someone were to search the web for your business or you want to advertise your site, having a custom domain name makes it easy to find and remember your business online.

With platforms like WordPress, Wix, and Squarespace it is now possible to build your own website without having to hire a web designer (although, it is still an option—albeit one that can cost around $7,000). Because a website builder covers hosting, can offer a customized domain, and includes many built-in features, you can expect to sign up for a monthly subscription. Depending on the site you choose, these prices can usually range from $6–$50 a month.

Powder and pill supplements are displayed for a product photo.

Step 4: Getting supplement product insurance

Estimated costs: $2,500

When selling a product people ingest, it is vital to have product liability insurance. You never know what kind of a reaction someone may have and if they choose to sue you over it. Most manufacturers also require you to have insurance in order to develop your product.

Insurance Canopy offers comprehensive coverage for vitamin and supplement products. Our plans offer general liability and product liability insurance, professional liability, equipment coverage, additional insureds, damage to rented premises, medical expense limits, and more. Every supplement company’s insurance cost will vary since no two companies are alike. We calculate your annual premium based on factors such as:

  • Number of employees
  • Product type
  • Online claims process
  • Volume of sales
  • Claims history
  • Additional limits or coverages

This helps our agents assess your level of risk and generate the limits on your policy. The more products you sell, the higher your risks, and the higher your payments may be.

With Insurance Canopy, you can apply for a quote entirely online. Then, an experienced agent will contact you to discuss the details of your policy, provide your supplement company insurance cost, and address any further needs. Getting insurance helps to lower or eliminate the cost of claims, meet or exceed retail requirements, and help you build valuable business relationships—making it worth the expense.

New supplements are being tested and having their ingredients tested under a microscope in a lab.

Step 5: Research and development

Estimated costs: $5,000

When it comes to developing your supplement product, you need to do some research beforehand. This involves testing your product’s ingredients for purity, strength, composition, and contaminants. You want to be sure your product won’t harm anyone and meets any legal regulations.

Testing can also help you identify what you want to list on your product label and any warnings you need to include—especially if your product can trigger an allergic reaction for ingredients such as dairy, nuts, and eggs. You can read the FDA’s “Dietary Supplement Labeling Guide” for more information on how to label your product.

You can then develop a prototype of your product to prepare for manufacturers. By creating a few hundred samples, you can do simple tests on different packaging materials and designs, check for any defects, study the ease of use, and run focus groups to receive valuable feedback. You will also be able to see how long it takes to produce your supplements from start to finish, helping you better plan your operations and logistics.

Step 6: Manufacturing and production

Estimated costs: $10,000

While this price can sometimes include the cost to develop and test a product, you want to find a high quality manufacturer—one who regularly tests samples of your product, is NSF certified, GMP certified, and FDA registered. This can help prevent you from having a liability lawsuit on your hands, leading to a halt in production, issuing recalls, or shutting down your business.

Take a look at some of the top private label supplement manufacturers in the USA. A private label manufacturer can be a lower-cost option as they don’t operate under big brand names who produce the same products under different names.

Supplements are manufactured and loaded into bottles at a factory.

Step 7: Packaging and shipping

Estimated costs: $5,985*

*This is a combined cost for packing and shipping. The total was estimated based on 1,000 packages weighing 5 ounces each using USPS first class business shipping services.

Packaging is the first thing a customer sees when they look at your product. Are you going to have capsule, powder, or liquid supplements? Will you use glass, plastic, or paper containers? The type of product will influence what kind of packaging you ultimately use. Make sure it is easy for a customer to use, the branding is unique, and the labeling and any warnings are clearly visible.

You may need additional packaging materials when it comes to shipping. You want to make sure the product stays safe, the containers don’t break, and the temperature is regulated. The cost to ship your supplement product will depend on the weight, materials, shipment time, location, and type of parcel. You can use the USPS Business Postage Price Calculator to better gauge your supplements shipping costs.

If you want to save on these costs, you can try partnering with a subscription service. Your product will be included in a box of other health, fitness, and lifestyle items customers can sample. You can also get in touch with a distributor or supplier. Typically stores will sell what their distributors carry, so getting your product into their warehouse can help you cut down on the packaging and shipping costs for individual orders.

A variety of supplements in different types of packaging.

Step 8: Marketing and advertising

Estimated costs: $5,000

According to Chron, most small businesses use an estimated 1% of their revenue for marketing and advertising their products. For example, if you want to make $500,000 in sales, be prepared to spend around $5,000 on marketing.

While you can go a more traditional advertising route by getting into health and fitness magazine ads or putting a commercial out on TV, many small businesses also turn to digital marketing because of the lower costs. This means putting out ads on social media and Google. You can build targeted ads or boost posts on social media and pay for search ads on Google. Oftentimes digital marketing can help you find your target audience and increase sales, making it easier for small businesses to market online.

You can also try working with influencers and partnering with other brands that share a similar audience. This builds trust with customers by showing the results of your product, and pushes your business out to new potential buyers. Capitalizing on customer testimonials is a great way to increase your brand awareness.

Another suggestion is to do a giveaway or offer coupons on your products. Many people like to sample diet and nutritional products before they commit to buying them. You can then reward your returning customers with a referral program or discount. Building a loyal customer base is key in growing your business.

A health and wellness influencer is recording herself showing off a new brand of supplements for her social media channel.

Take A Chill Pill—You’ve Got This!

In this $21 million dollar (and growing) industry, your business has the opportunity to reach new markets and increase sales each year. While starting a business may be easy, the results come from maintaining it and staying consistent in your efforts. By preparing yourself to have start-up costs, unexpected expenses, and yearly fees, your business has a better chance of surviving those beginning stages. Check out this article for more helpful tips on how to start your own corporation.

We hope this guide helps you feel more confident calculating the cost of starting a supplement company! When you think of business insurance, think of Insurance Canopy. We are here to help you protect what matters and see your company grow. With Insurance Canopy, you can take a chill pill knowing we have your back!

Note: this guide does not cover every single action you need to take when starting your nutraceutical business. The vitamin and supplement industry can carry many risks and is heavily regulated, so be sure to do continued research and consult a professional for any business advice.

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Product Liability for Vitamins & Dietary Supplements


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Get Covered With

Product Liability for Vitamins & Dietary Supplements

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