You just finished writing a recipe, and it’s GOOD good. Then comes the question “how much does it cost?” and in comes the rush of anxiety. Not only are most of us creatives not the best at math, but calculating a plate cost can be super time-consuming.
Yet whether you freelance as an innovative home chef, a talented recipe creator, or sell bomb-baked goods on the side, one of the most important factors in determining income is deciding on a fair price point for each dish, course, pastry, what have you.
Despite how intimidating it can feel to put a price on your talent, don’t cheat yourself or your wallet. Knowing down to the cent what a dish costs to make and using that number to inform what you’re charging for a plate takes out any guesswork in determining well-earned profit.
Let’s start with a simple pastry. Below we’ll break down how to price out the consumer cost of a Danish, based on a straightforward recipe.
- List out each ingredient the recipe calls for, its cost, and the amount per package the ingredients were sold in. This is always easiest when the ingredients are listed in metric units like grams.
- Divide the cost of your ingredient as listed on the receipt (column B) by the amount per package (column C) to see the cost per unit (column D).
- Now it’s time to take a look at your recipe, and list out the amount of each ingredient the recipe calls for (column E) and multiply that number by the cost per unit (column D), and you’re looking at the total cost of that ingredient in accordance to the recipe! You did it! Repeat those steps for each ingredient in your recipe – I know, math is hard!
Almost done, I promise! Once you’ve calculated the total cost of each ingredient, it’s time for some simple addition, so add each of those numbers up, and divide by the number of portions the recipe yields.
You want your gross profit margin to be around 70% – 75%, so you need to multiply your production cost by 4 to determine your item’s price tag. While that might look like a shockingly large margin, it’s really not when you remember you’re also paying out of pocket for everything from specialty equipment to elegant garnishes to cling film all the way down to the gas and electric bills. Oh and of course, taxes!
Ingredient prices ebb and flow so make sure to save the algorithm for each recipe in your arsenal into a formatted spreadsheet to easily update costs. If ingredients prices climb or your dish has a major glow up (go off, you talented lil chef) you may need to revisit your chart and adjust your price to your new production cost.