Private Label vs Custom Formulation: Which Is Best for Your Supplement Brand?

When launching your supplements brand, one of the first decisions you’ll need to make is whether to go with a custom formulation or a private label... Your decision will affect everything from startup costs and time-to-market to product differentiation and profit margins. 

To help you determine which option is best for your company, we’ll discuss the pros and cons of private label vs custom formulation supplements. 

Current State of the Dietary Supplements Market

The global dietary supplements market was valued at $192.65 billion in 2024 and is projected to reach $414.52 billion by 2033, growing at a CAGR of 8.9%. With this kind of growth potential, your manufacturing strategy can significantly impact your ability to capture market share. 

Whatever path you choose in the private label vs custom formulation supplements decision, ensure it aligns with your overall brand strategy, available resources, and competition positioning. The best choice is the one that gives you the strongest foundation for the specific supplement business you’re building. 

What is a Private Label Supplement Brand? (Pros and Cons)

Going the private-label route means you use preformulated products manufactured by a third party that you rebrand and sell as your own. The manufacturer has already sourced the ingredients and established the production process. In turn, all you have to do is select a product from their existing catalog, customize the label with your branding, and sell it under your company name. 

The Pros of Private Label

The benefits of private labeling can be compelling for new supplement entrepreneurs or those testing market demand before making larger investments. 

• Speed to market: Since the formulation already exists and has an established production process, you can launch products faster. 

• Lower upfront costs: This method is accessible to those with limited capital, allowing them to avoid the typical expenses associated with formulation development, stability testing, and minimum order quantities. 

• Reduced complexity. You don’t need deep expertise in supplement formulation, ingredient interactions, or regulatory compliance details. This allows you to focus your energy on branding, marketing, and customer acquisition rather than product development. 

The Cons of Private Label

This approach does come with some constraints depending on your goal and business model:

• Less control: You’re dependent on the manufacturer's ingredient sourcing, quality standards, and production schedule. 

• Margin constraints: Private label manufacturers build their profits into the per-unit cost, which means you may face limited long-term margin growth.

• Limited differentiation: Other brands can select the same formulations. 

Choose Private Label If

• You need to launch quickly

• You’re working with limited capital 

• You want to validate your business model before investing heavily 

• You’re testing market demand before making larger investments 

• You plan to offer supplements as an add-on or upsell, not your flagship product 

What is a Custom Formulation Supplement Brand? (Pros and Cons)

If you take the custom formulation route, it means you’re working with a contract manufacturer to develop supplement products created specifically for your brand. You’re able to collaborate on ingredient selection, dosages, delivery formats, and formulation designs to create products that don’t exist anywhere else in the market. 

The Pros of Custom Formulation 

Custom formulation offers strategic benefits that can create sustainable competitive advantages for your supplement brand.

• More Control: You can optimize for efficacy, create innovative combinations, or target specific customer needs that existing products don't meet. 

• Product differentiation: You can build product loyalty and competitive advantage around your unique formulation, limiting market duplicates.

• Better long-term margins: Without the manufacturer's markup built into private label pricing, you can often achieve lower per-unit costs once you reach sufficient volume, improving profitability as your brand grows.

• Intellectual property ownership: Your proprietary formulations belong to you, which can be significant if you ever want to sell your brand or license your products. 

The Cons of Custom Formulations

Custom formulation requires more resources and expertise, which can be prohibitive for some entrepreneurs.

• Greater complexity: You need to have a better understanding of ingredient interactions, effective dosages, regulatory requirements, and quality control standards. 

• Longer launch timeline: You could be waiting months rather than weeks to get products to market. 

• Higher upfront investment: Formulation development, stability testing, and setup costs can be pricey before you even place your first production order. Additionally, minimum order quantities are typically higher. 

Choose Custom Formulation If

• You have sufficient capital to invest upfront 

• You need genuine differentiation in your market 

• You have unique product insights that differentiate your brand 

• You have the resources to play a longer game with your strategy 

• You’re building a premium brand that requires proprietary products 

Private Label vs Custom Formulation Supplements: Your Decision

The private label vs custom formulation supplement debate ultimately comes down to your specific situation, goals, and resources.  

• Brands offering supplements as add-ons or upsells to their core business, or those with limited operational infrastructure, often find private-label solutions better aligned with their needs. 

• Brands that build their entire business around supplements as their flagship product, or those that require unique formulations for competitive differentiation, typically pursue custom formulation. 

Ready to Launch? Integrate Clinical Wellness Services with OpenLoop 

Building a successful supplement brand also means having the right infrastructure to expand, especially if you plan to layer in clinical wellness services.

As consumer demand shifts toward whole-health, brands are moving beyond supplements alone. OpenLoop helps you confidently evolve your supplement brand into a full-spectrum wellness platform, adding clinical services like medical weight management, longevity care, TRT, HRT, and ongoing supportive care when you’re ready.

We power the clinical and operations side so you can stay focused on your brand.

OpenLoop provides:

• White-label telehealth infrastructure to extend beyond supplements

• Nationwide clinician coverage across all 50 states

• Built-in regulatory and HIPAA-compliant frameworks

• Strategic pharmacy and supplement partnerships

• 24/7/365 patient support to deliver a seamless member experience

Ready to grow your supplement brand into a comprehensive clinical wellness offering? Let’s talk!

*This content is intended for general informational purposes only and should not be construed as legal advice. For guidance on your specific situation, please consult a licensed attorney.