Margin and costs

Unfortunately, you do not get to take home your retail price. Before you see a profit, the grocers margin is deducted, the distributors margin is deducted and your costs are deducted. The amount that is remaining is your profit.

Grocer’s margins are a percentage of the retail price. sometimes put to 40%.

Distributor’s margins are a percentage of the the grocers cost, sometimes up to 35%

Your profit is the difference between all of your cost and your selling price.

Your costs can include ingredients, packaging, labor (in house or co-packer). These are call cost of goods sold. In addition your costs also include marketing, insurance, social media, website, utilities, sales staff and more.

Proper planning prevents poor performance. Before launch, consider all of the factors that will affect your profit and your margins.

 

Author: Mike Schwartz

After spending many years in kitchens in and around New York, and teaching at the Institute of Culinary Education for 12 years, Mike has moved on to his own business. Mike owns BAO Food and Drink, which makes 33 varieties of cultured vegetables, drinks and sauces and the Organic Food Incubator, which offers solutions to small food manufacturers. More importantly Mike is Gabi and Harry's dad and works hard to make sure that they are fed correctly.