Most new brands underestimate their landed cost and overestimate their achievable margin, usually by enough to matter. This page sets out what actually goes into the number, how much margin each channel consumes, and the arithmetic that decides whether a product can carry your business model at all.
What is in a per-unit manufacturing cost
Raw material, which in herbal products is the dominant variable and moves with agricultural commodity pricing. Processing and manufacturing overhead. Primary packaging, the jar, bottle, blister or tube. Secondary packaging, the carton and the label. Testing and release. Then our margin.
What is usually not in the quoted number: artwork and design, printing plates or cylinders, your product-approval or licence fees, freight, and any additional testing you commission. We quote these separately rather than burying them, because a single blended number is how brands discover their margin is thinner than planned three weeks before launch.
What each channel takes out
Marketplaces take commission plus fulfilment, frequently 25 to 40% of the selling price once advertising is included. Quick commerce takes a substantial commission and expects promotional participation. Distribution and PCD channels need margin for the distributor and the retailer, commonly 30 to 50% across the chain. Direct selling needs enough to pay several levels of a compensation plan, often 35 to 45%, before company margin.
D2C looks better on paper because there is no intermediary, until you add customer acquisition cost. In competitive categories paid acquisition can exceed what a marketplace would have charged in commission.
Why MLM products look expensive
If a compensation plan has to pay out 40% across levels and the company needs its own margin, the manufacturing cost has to sit at a small fraction of retail. That is why direct selling favours products with no consumer price anchor, noni juice, stem cell tablets, multi-berry blends, rather than amla juice, where everyone knows roughly what it should cost.
This is the single most common costing mistake we see. A brand picks products on merit, builds a compensation plan, and then discovers the two are incompatible. Work backwards from the plan.
Commodity volatility, and what honest manufacturers do about it
Garcinia, saffron, glucosamine, whey and amla all move materially with the market. A quotation given in one quarter may not hold in the next. Our practice is to tell you which ingredient moved and reprice, rather than hold the price by quietly reducing the extract load, which is the alternative, and it is common.
If you have predictable annual volume, talk to us about scheduled call-offs. Committing to a volume lets us buy in season, which is usually better for both sides than repricing every order.
The arithmetic worth doing before you order
Take your intended retail price. Subtract channel commission and fulfilment. Subtract acquisition cost if you are buying traffic. Subtract GST. What remains has to cover your landed unit cost and leave a margin you can run a business on. If it does not, the answer is a different format, a different pack size or a different category, not a bigger first order to get a better unit price.
Do this before artwork. A pack size and MRP chosen without this arithmetic is the most expensive kind of decision to reverse, because the plates are already made.