How to cost a recipe: a step-by-step guide for small food businesses

Most small food businesses price the way they shop: roughly. A bag of flour is about a fiver, an egg is about 25p, so a loaf is probably about a pound to make. That "probably" is where the money leaks out. Costing a recipe properly takes about ten minutes the first time and gives you a number you can build every price on.

Here's the method, then a worked example you can copy.

Step 1: Get the real price of every ingredient

Start with what you actually paid and how much you got: the pack price and the pack size. Use your last invoice or receipt, not a figure you remember. If you buy 16 kg sacks of flour for £22.40, that's your starting point, not "about £15 a bag".

If you pay VAT and claim it back, use prices without VAT. If you can't reclaim it, use the price you paid including VAT, because that's what it really cost you.

Step 2: Turn each pack into a cost per gram, ml or item

Divide the pack price by the pack size in the unit you weigh in:

• Flour: £22.40 ÷ 16,000 g = £0.0014 per gram (£1.40 a kilo)
• Butter: £8.00 ÷ 2,000 g = £0.004 per gram
• Eggs: £3.90 ÷ 15 = £0.26 each

Keep these in one place. They're the only numbers that change when a supplier puts prices up, and everything else is worked out from them.

Step 3: Cost each line of the recipe

Write the recipe in weights (grams and millilitres), not cups or spoons, and multiply each amount by its cost per unit. Include the small things: the oil for the tin, the egg wash, the pinch of salt, the seeds on top. They're small on their own and not small together.

Step 4: Add it up for the batch cost

The total of every line is your batch cost: what one batch costs in ingredients. If you make something with a part you also use elsewhere, like a pastry or a sauce, cost that part once as its own recipe and use its cost per gram in each recipe that uses it.

Step 5: Divide by what you actually get out

Divide the batch cost by the number of portions the batch really gives you, not the number the recipe hopes for. If a tray "makes 12" but you trim the edges and always get 10 good slices, divide by 10. This one step is where most recipe costs go wrong.

A worked example: a batch of 12 cheese scones

• Self-raising flour, 450 g at £0.0011/g: £0.50
• Butter, 100 g at £0.004/g: £0.40
• Mature cheddar, 200 g at £0.009/g: £1.80
• Milk, 250 ml at £0.0012/ml: £0.30
• Egg for glazing, 1 at £0.26: £0.26
• Mustard powder and salt: £0.05

Batch cost: £3.31. The batch gives 12 scones, so the cost per scone is £3.31 ÷ 12 = about 28p. If you sell them for £2.50 each, ingredients are about 11% of the price. If you add a paper bag at 4p, the cost per scone becomes 32p.

The same method works for anything you make in batches. For a batch of chutney or hot sauce, the jars or bottles, lids and labels go in as ingredients too, and they're often a bigger share of the cost than people expect.

The mistakes that make a recipe cost wrong

• Leaving out the small stuff. Glazes, oil, seeds, spices and garnish can add 5 to 10% to a batch.
• Using the theoretical yield. Divide by what you sell, not what the recipe says.
• Forgetting packaging. Boxes, bags, labels and boards are a cost per item. Add them to the portion cost.
• Mixing up units. A pack priced per litre and a recipe in grams needs converting first.
• Old prices. A cost worked out last winter is probably wrong by spring.

Cost is not the price

Your ingredient cost per portion is the floor every price is built on, not the price itself. Your time, your overheads and what your customers will pay sit on top. We cover that next step in how much a micro-bakery should charge and pricing for wholesale.

Keeping it right when prices move

The hard part isn't costing a recipe once. It's keeping thirty recipes right when butter goes up. If your ingredient prices live in one list and every recipe reads from it, one change updates everything. If each recipe has its own copy of the price, you'll need to update each one by hand. See updating recipe costs when prices rise for a simple routine.

To cost one recipe now, use our free recipe cost calculator. To keep every recipe costed automatically, with prices for retail and wholesale, try MakrPrep free for 14 days, no card needed.