You Have a Great Recipe. Do You Have a Business? How to Price a Food Product

Greg Aronoff, 3 min read

This lesson is an essay published by Oregon State University PACE.

Read the essay

What you'll get

A short post arguing that a co-packer's quote is only part of your cost, since packaging, labor, overhead and freight belong in it, and that you, a distributor and the retailer each need a cut before the product reaches the shelf; its classic store markup doubles the wholesale price, which leaves the retailer half of the shelf price. Its quick test is to divide your target shelf price by four and check that your fully loaded cost per unit comes in under that figure; treat its other targets as unsourced rules of thumb, since the page also promotes an Oregon State course.

Do this week

Add up your fully loaded cost for one unit, including packaging, labor, overhead and freight, then divide your target shelf price by four and write down whether your cost fits under it.