How to Calculate The Selling Price of Food

Posted by Damian Roberti on

All right. So how do you calculate the selling price of food and how much should I mark food when I sell it, Damian, these are two great questions I got from some subscribers and we're going to go over those two subscriber questions. I'm going to show you a huge resource if you're not familiar with Shopify on how to sell food on Shopify and figuring out exactly the calculating price for your food. We're going to dive into that right now.


All right. So welcome back to marketing foot online. So if this is your first video woven marketing on line, I'm Damian, Roberto, founder, and CEO of marketing food. If you are brand new, definitely hit the subscribe button. We have over a thousand videos for you. The food entrepreneur, I had three questions I wanted to dive into really quick in this really quick video for Shopify. Two of the questions were, how do you calculate your selling price of food and how much should I mark up food when I'm looking to sell it online? And I actually found a fantastic resource. It's actually through Shopify. I'm going to, I'm going to show you a little bit on my screen here, how this calculator works. And down below this video, I'll have a link. That'll take you right over to our website to get you directly to this link.

So you can actually check out this calculator for your own food product. So if you're not familiar with Shopify really quick, let me show you some great benefits. I actually have two stores on Shopify, a marquee photo And we have food biz USA, which is our generic website that we actually do a lot of our teaching and training on through Shopify as well. So what we have right here at Shopify has got three different types, three different levels. The one that we actually use, that's really sufficient for what we do because of the size of our store is the basic Shopify, which is $29 a month. Okay? Now you can get the Shopify is the next one up and then advanced Shopify. The last two, if you're really just starting out, honestly, you want to stay away from, cause you don't necessarily need that big of a store just yet.

I'd recommend you check out the basic ones if you're not familiar with it. And again, if you want to check out, they have a 14 day free trial, by the way, you can check that link out, down below the video. So let me show you really quick on how to do this. Shopify is a fantastic platform by the way, to sell food of any kind. If you're looking to sell candy, if you're looking to sell cupcakes, baked goods, if you're looking to even sell through stuff through cottage food from home, and you want to sell locally, you can even tap into Shopify. If you're a food truck, even you can even tap into their POS system and their website and integrate all of that together. The big thing about Shopify that's really great is the amount of apps that they have, which increases the functionality and features of your website.

That's why we love it so much. And that's why we use it for the two sites that we have. Now, here is their little price calculator. Now this is actually dedicated specifically to food, profit margin calculator. This thing is awesome. And it's instantaneous. It's quick. It doesn't take much time to obviously do this, but it's going to give you a really good understanding of how to price your products. Now, let me give you a few tips though, after we put our numbers in here, I'm going to go ahead and calculate the profit, but you have to be aware of a couple of things. Number one, if you're going to take into consideration your fees that you're going to have, you're going to have a transaction fee. Of course, any platform you sell on online, you're going to have a transaction fee. Take that into consideration.

That could be two, three, 4% or even higher of the transaction. Okay? So when you see this and you see your actual profit, keep that in mind that you may need to increase the actual per transaction amount. That's something that I recommend to a lot of clients when I do my consulting business is just that you don't want to sell a product for like 3, 4, 5, $6. Because to be honest with you, you're going to get eaten up in fees. You also have to keep in mind Shopify charges, as I showed you the $29 a month fee. So that's a fee right off the bat, no matter how much you sell plus any other fees that you may have involved, such as storage of inventory, employee, payroll, paying yourself, all of these things are things you need to take into consideration. So let me show you how this works.

This is a fee calculator right here, very simple cost of your item. I'm going to create some generic ideas, okay? So this cost me $5 to make and the margin I want in the market at 50%, you hit calculate profit and you're good to go. So it actually shows you your sell price. You need to be at around seven 50, you're going to make two 50 your profit per unit, and then your gross margin is going to be 33.3, 3%. Cool. Fantastic. Now here's what I would recommend. Most of the average selling amounts for us on our platforms for our candy and snacks and all of it. It's between around 28 to 30 to $35. Okay. So the reason being is that I know for a fact that there somebody to sell less and some that sell much, much more, but our average customer spends over $30 per transaction.

There's a reason, as I just mentioned, you want to make sure that you making enough money on each transaction to obviously make it profitable because every transaction is going to have a multitude of other expenses. Like I said, about the fees where the transaction, if you're using PayPal or Stripe or even Shopify payments, you want to make sure when you start selling food on Shopify, that you're marking up your product. So it's actually profitable. So $5 items, you know, this is not going to make it what you need. So how do you do that demon? You want to make sure that you bundle your products. One of the best ways to increase a per transaction amount is going to be through bundling. So let's say here, right here, instead of $5, what if we went to $35? I'm sorry, half the items is $5 and we wanted to get it up. Let's go to a hundred percent markup.

Okay. So the market percentage is going to be a hundred percent. So you're going to sell this $5 item for 10, right? So let's say if we want to go, we want to mark it up 300%. So there we go. So your sell price is going to put you at around $20 for the cost of a $5 item. You're going to make a profit of $15 on the transaction. Now, if that is obviously something that's applicable for your product, then now, you know, you're going to be making a 75% margin. Okay? So now let's go up a, maybe 500% on it.

There we go. So now, and I didn't, that cost me $5. I'm going to charge 30 and I'm going to make 25 on now. Damien, that sounds like crazy. I got 83% margin. Believe it or not online. When it comes to specialty food products, it's not, there's some products that we actually make that we cost us around 2 25 to 50. We charged 24 99 for, and let me show you that two 50 and let's just say that was all right. So we're going to go up around 700%. That's going to even put it while. So we're at about 800% and that's going to put your sale price around 2250. It's actually a little bit more than that. So we make around $20 per unit of that particular product because we make it to order and it's very inexpensive to make. So this is a great calculator specifically for food.

If you look into find out how much of a margin and how much you should sell for just keep in mind, as I mentioned those other fees, because they will eat up any profit that you may have. So thank you to the two subscribers for sitting in those questions. I want to, how do you calculate the selling price of food? And of course, how much should I mark up my food product? I hope that answers you guys. The question. And if it does, please do give us a big thumbs up. If you have any other questions about pricing, a product, specifically food products, please let us know down below and I'll hop on your questions as soon as I can. I'll see you guys on our next video.