How to price a recipe
- Cost the recipe. Add up what every ingredient in one batch costs, plus packaging and other extras.
- Divide by what it makes to get the cost of one serving, slice or box.
- Pick a target food cost percentage: the share of the price you want ingredients to take.
- Divide the cost by that percentage.
A slice of cake that costs $1.20 to make, at a 30% target, should sell for 1.20 ÷ 0.30 = $4.00.
Food cost percentage and markup
Some people price with a multiplier instead (“charge three times cost”). They are the same idea:
| Target food cost | Price = cost × | $1.20 serving sells for |
|---|---|---|
| 20% | 5.0 | $6.00 |
| 25% | 4.0 | $4.80 |
| 30% | 3.33 | $4.00 |
| 35% | 2.86 | $3.43 |
| 40% | 2.5 | $3.00 |
What the price has to cover
The gap between the ingredient cost and the price is not all profit. It has to pay for:
- Your time: shopping, prep, baking, decorating, packing, delivery and washing up.
- Packaging: boxes, bags, labels, ribbon, cake boards. In Recipe Cost Calculator you can add these to the recipe as an extra cost so they are in the cost per serving.
- Energy: an oven running for an hour is a real cost, especially for small batches.
- Waste and testing: the batch that didn't come out right, and the samples you give away.
- Fees: card payments, market stall rent, delivery apps, licences and insurance.
Check the price against the market
The formula gives you a floor, not the answer. Look at what similar products sell for near you. If the market price is well above your number, you may have room to charge more. If it is below, look at the recipe for savings, a smaller portion or a different pack size before you cut the price.
To see what share of an existing price goes on ingredients, use the food cost percentage calculator.