How to cost and price a food product, with a free calculator

A regional buyer tastes Nomsa’s chakalaka at her Saturday stall in Gqeberha and asks for a price per case of 12. She charges R45 a jar because it felt right, and she has never written down what a jar costs her. Worked line by line, it costs R35.13 to make, and on the course’s illustrative margins it reaches the shelf at R93.46 including VAT. Nomsa is the producer in the training scenario of ASC’s Introduction to Food Product Development course, and her figures carry this guide.

What does one unit of my product really cost?

One unit costs its share of the batch plus what it carries on its own. Add the ingredients at usable yield, the labour and the energy for one batch, and divide by the whole units that batch fills. Then add the jar, lid, label and overhead per unit. That is the cost per unit made. Divide it by 1 minus your wastage for the cost per unit sold.

In the course’s training scenario Nomsa’s batch uses R133.28 of ingredients, 3.5 hours of her time at R40 an hour and R30 of energy, R303.28 in all. It fills 13 whole 250 g jars, so each jar carries R23.33. Add R10.30 for a new hot-fill rated jar, lid and printed label and R1.50 for delivery and admin, and the cost per jar made is R35.13.

In the course’s practical a figure passes when it lands within 1 percent of the answer, so on a supplier price of R56.89 the window runs from R56.32 to R57.46. That allows for rounding but not for a wrong method. Four mistakes land outside it.

Why do I cost ingredients at usable yield?

Because you pay for the peel and the trimmings, and none of it goes into the jar. Divide the price by the pack mass in kilograms, then by the usable yield.

In the training scenario onions cost R18.00 for a 1 kg bag and 88 percent is left after peeling, so R18.00 ÷ 1 ÷ 0.88 = R20.45 per usable kg. The 820 g of chopped onion in the batch costs R16.77. Cost it as if the peel were free and you get R14.76, R2.01 short.

Make the same slip on all five fresh vegetables, the onions, carrots, both peppers and the tomatoes, and the batch is under-costed by R11.11. The ingredients come to R122.16 instead of R133.28, and the supplier price lands about 2.4 percent low on every jar.

Write purchased or usable beside every mass in a costing. The shopping list needs purchased mass, which is the usable mass divided by the yield, so 820 g of usable onion means buying about 932 g. In ASC’s experience the two errors that turn up most often in small producers’ costings are mixing the two kinds of mass and applying the yield twice. Weigh your own yields, because they shift with the season and the supplier.

Where do labour, energy, packaging and overhead go?

Labour and energy belong to the batch, so they are shared across the jars it fills. Packaging and overhead belong to each jar. Here is Nomsa’s jar from the course’s training scenario.

Labour is the biggest single line, R10.77 a jar. Leave it out and the jar seems to cost R24.36, which is how small producers end up working every weekend for nothing.

Spread batch costs over whole jars only, because nobody buys a part-filled jar. On a hot, windy day the scenario’s batch loses 18 percent in cooking instead of 14, fills 12 jars instead of 13, and the cost per jar made rises to R37.07. Weigh the pot before and after cooking so the yield in your costing is measured, not guessed.

Why do I divide for wastage instead of multiplying?

Breakages, rejects and unsold stock all count as wastage, and the jars that sell have to pay for the ones that do not. In the training scenario Nomsa allows 5 percent. Make 100 jars at R35.13 and she has spent R3 513. If 95 sell, each must carry R3 513 ÷ 95 = R36.98.

So cost per jar sold = cost made ÷ (1 minus wastage). Multiplying by 1.05 gives R36.89, nine cents low, and the gap widens as wastage grows. Leave wastage out altogether and the supplier price comes out at R54.04 instead of R56.89. That is 5 percent low, exactly the share of jars nobody pays for.

Wastage moves, too. In the scenario, transport breakage that pushes it to 10 percent adds R3.16 to every jar’s supplier price. Count your real breakages and returns.

What is the difference between margin and mark-up?

Margin is profit as a share of the selling price. Mark-up is profit as a share of the cost. They describe the same deal with different numbers, which is why confusing them costs money.

To earn a margin, divide the cost by 1 minus the margin. In the training scenario Nomsa wants 35 percent on her supplier price, so R36.98 ÷ 0.65 = R56.89 a jar. Her profit of R19.91 is 35 percent of R56.89 and 53.8 percent of R36.98. Her case of 12 is R682.67, worked on the unrounded price, because you round only at the end.

Multiply R36.98 by 1.35 instead and you get R49.92. That is a 35 percent mark-up, and it leaves a margin of only 25.9 percent, R6.97 short on every jar and R83.63 short on every case of 12.

To check a mark-up someone quotes you, find it in the right-hand column and read across to the margin it really leaves.

How do the retailer’s margin and VAT get to the shelf price?

The retailer works its margin on its own selling price, the same way you work yours. The course uses 30 percent as an illustration, because real retailer margins are set in each supplier agreement and vary, so ask the buyer.

VAT goes on top for the shopper. The SARS VAT page gives the standard rate as 15 percent, and the increases to 15.5 and 16 percent announced in 2025 were reversed. Quote your case price excluding VAT, and say so on the quote.

Now set the shelf against the stall. In the scenario, at R45 Nomsa keeps R8.02 a jar once her wastage is counted, a margin of 17.8 percent before stall fees. The same jar on a shelf at R93.46 is more than double her market price. If that looks too high for a 250 g jar of relish, the fix is to take cost out of the jar, as the co-packer route below does, not to cut the price until the margin is gone.

The buyer will also want samples, a specification and a barcode. Our guide from your kitchen to a supermarket shelf in South Africa takes them in the order a small producer meets them.

What happens to the price with a co-packer?

A co-packer makes your product on its premises, to your specification, under your name. In the training scenario Nomsa’s illustrative quote has a minimum run of 2 000 jars, R4.20 a jar for conversion, R7.40 a jar for the jar, lid and label, ingredients 20 percent cheaper at volume and 3 percent wastage. She still carries her own R1.50 a jar for delivery and admin.

Each jar costs R13.83 less to make. The catch is cash. The first run costs about R42 600 to make (2 000 × R21.30) before a single jar sells, and 2 000 jars need a validated shelf life long enough to sell them.

Your name stays on the label, and so does the responsibility. A co-packer’s Certificate of Acceptability covers its own premises only. The hot-fill process and the pH evidence belong to the pot they were set and measured in, so the process is set again for the co-packer’s kettle and the pH measured again there. Why that matters in a hot-filled relish is in our post is your homemade sauce safe to sell?. Sign a confidentiality agreement before the recipe changes hands, and put the rest of the deal in writing.

How do I cost my own recipe?

The free Recipe Cost and Price Calculator, the costing tool from Module 2 of the course, runs the same chain on your recipe.

1. Enter each ingredient’s mass and mark it purchased or usable, with the price paid, the pack size and the usable yield.
2. Add your cooking loss, filling loss and net quantity per unit. Only whole units count.
3. Enter the labour hours and your hourly rate, the energy per batch, and the jar, lid, label and overhead per unit.
4. Set your wastage, your target margin, the retailer’s margin and VAT.
5. If you want to test yourself, write your own figure for each step first. The calculator tells you which ones land within 1 percent.

Load the case study numbers to watch the training scenario’s jar go from R35.13 to R93.46, then start a blank costing for your own product. Nothing you type is sent to ASC, your draft stays on your device, and you can export the costing to Excel.

Use this month’s prices and an honest rate for your own time. If cooking loss and yield are new ideas to you, Food Technology for Non-Technical Professionals explains the processing behind them.

Frequently asked questions

Should I include my own time in the cost of my product?

Yes. Your time is a cost even when nobody pays you a wage. In the course’s training scenario labour is R10.77 of a R35.13 jar, at R40 an hour. Leave it out and the jar seems to cost R24.36, and the price will never pay for the weekends spent making it.

Do I add VAT to the price I quote a retailer?

Only a registered VAT vendor charges VAT. SARS gives the compulsory registration threshold as R2.3 million of taxable supplies a year from 1 April 2026, so check your own position with SARS. Quote your case price excluding VAT, and tell the buyer if you are a registered vendor. The retailer adds VAT at 15 percent to its own shelf price.

What should I do if the buyer offers less than my case price?

Work out what the offer leaves you first. In the course’s training scenario Nomsa’s buyer offers R600 a case, R50 a jar. Against a cost per jar sold of R36.98 that is a 26.0 percent margin, not a loss, but R6.89 a jar under her price. Counter with your costing, ask what volume the buyer will commit to, or take cost out of labour and packaging.

How often should I recost my product?

Whenever something in the chain changes. A new ingredient price, a recipe change, a different jar or a bigger pot can each move the cost per unit, and a change to the yield or the cooking time moves labour and energy as well. Every recipe version needs its own costing, so recost before you send a buyer a quote.

Does the free calculator send my recipe to ASC?

No. The Recipe Cost and Price Calculator is practice only. Nothing you type is sent to ASC and your draft stays on your own device. The only practical work ASC stores and marks is the assessed practical inside the course, which runs on a case variant generated for your account, not on your recipe.

Sources. South African Revenue Service, Value-Added Tax, for the standard rate and the 2026 registration thresholds, checked 28 October 2026. Every other figure is the course’s training scenario, at illustrative 2026 prices excluding VAT unless stated.

General guidance on costing and pricing, not tax advice. The retailer margin used is an illustration.

Written by Mthokozisi Nkosi, Lead Auditor, Trainer and Consultant at ASC Food Safety Consultants.