What counts as COGS for a supplement brand

For measuring POAS, "cost of goods" means every cost that scales with each order you sell. Ad spend is not included, because it's the other side of the ratio. For a supplement brand, the capsules themselves can be a small part of it. The bottle, the testing, the marketplace fees and the shipping all count too.

What goes in

Cost	Count it?	Why
Ingredients or finished product from the contract manufacturer	Yes	The base of unit cost
Manufacturing and encapsulation	Yes	Charged per unit or per batch
Ingredient and batch testing, spread per unit	Yes	Required under the FDA's manufacturing rules for supplements
Bottles, seals, desiccants, labels	Yes	Per unit
Inbound freight	Yes	Part of landed cost
Pick, pack and outbound shipping you pay	Yes	Scales with orders
Marketplace referral and fulfilment fees	Yes, on marketplace orders	Charged on every sale through the marketplace
Payment processing fees	Yes	A share of every direct order
Stock written off at expiry	Yes, spread across units sold	Best-before dates turn slow stock into a cost
Returns that can't be resold	Yes, spread across orders	An opened bottle can't go back into stock
Subscribe-and-save discounts	No, they lower revenue	Counting them as cost double-counts them
Formulation, clinical studies, creator seeding	No	Paid once, or marketing
Google Ads spend	No	It's what POAS divides by

Supplement makers in the US must follow the FDA's current good manufacturing practice rules for dietary supplements, which include testing requirements for ingredients and finished products. Testing is charged per batch, so it costs more per bottle on a small run than a large one.

Returns are worth a look too. FitLife Brands, the company behind the figure above, refunds in full only for unopened, undamaged products, within 30 or 60 days depending on the brand. An opened bottle that comes back is a write-off, whatever your policy says about refunds.

Building one bottle's cost

Three levels of accuracy

Selvra OS works with three tiers of cost data and shows which one a figure is based on.

T1: one flat margin (labelled "estimated")

One percentage for the whole range. This is workable for a brand with a handful of similar products sold one way. It misleads once marketplace and direct sales, or single bottles and bundles, sit together.

T2: margin by category (labelled "approximate")

A margin per product type and channel: capsules, powders, gummies, bundles, and marketplace versus direct. Channel matters here as much as product, because marketplace fees change the margin on the same bottle.

T3: cost per product (labelled "verified" once synced)

Shopify's Cost per item field, per variant, read directly. Bottle sizes and multipacks are variants with different costs, so each needs its own figure.

Reading the benchmark above

The figure above is one listed company: FitLife Brands reported a gross margin of 38.6% for 2025, so its cost of goods was 61.4% of net sales. About 49% of its 2025 sales went through Amazon's US marketplace and 14% to GNC, so much of its revenue carries marketplace fees or wholesale pricing. It also completed an acquisition during the year; excluding an inventory accounting adjustment, its gross margin would have been 39.9%. It is one small company, so treat the figure as a reference point, not a target.

Common COGS mistakes in supplements

• Counting only the capsules. Bottles, testing and shipping are per-unit costs too.
• Leaving marketplace fees out of the margin on marketplace sales.
• Ignoring expiry. Stock that runs out of shelf life is a cost of the stock that sold.