When we are talking about Margins And Costs relating to the food manufacturing industry you need to know somethings. After you finally get your product distributed to the supermarkets, and now your looking for where is your profit?
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.
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