Before you launch your food product, a crucial aspect that rookie entrepreneurs commonly overlook is product pricing. Frankly speaking, they are the ones that do not last long in business, especially where competitors have a better food pricing strategy.

The Costs To Create A Product

To set the cost of creating a food product, copying competitor’s prices may seem like a safe option but actually, it isn’t. Because it needs thorough research of the best pricing models that work best in the food industry you’re in.

Once you have a clear vision and strategy for a fixed price of your food product, deciding on discounts, promotional prices and member prices will be a piece of cake. So, get your calculator and notepad out and jot down these tactics.

What Are the Costs to Create a Product?

Besides creating a food product, you need to know how to set the product cost after considering all the elements involved.

So before you even start thinking about experimenting with the price of your product, consider the fundamental expenses first.

Product Cost

Making your food product needs supplies, machinery, and labor among other things. So, the cost of manufacturing must be reflected in the actual price of your product. This is so your basic expenses are covered for long-term production.

• Manufacturing
  Raw materials or components that are used specifically to make your product.
• Direct Labor
  Wages, benefits, and insurance for your workers involved in the production.
• Manufacturing Overhead
  Indirect costs for machinery and operations (glue, tape, supervisors, etc).
• Packaging
  Packaging materials, printing costs, and anything related to the food packaging.

Period Cost

Also known as non-manufacturing costs that need to be covered to make your product but are not linked to the actual product itself.

• Rent
• Personal Income
• Professional Fees, Licenses, or Permits
• Taxes
• Facilities
• Utilities
• Logistics
• Wastage
• Marketing
• Website Maintenance

How To Price Your Food Product?