Charging the correct meal prep prices is essential to the success of your business. If you price your services too low, you may not be making a profit, but if you price them too high, customers may go elsewhere.
This article will help you determine how to charge for meal prep services to find the perfect balance and maximize your profits.
Know Your Budget and Expenses
To start, you need to know your budget and expenses. Expenses are typically divided into a few categories: supplies, overhead, marketing, and labor.
Supplies include all of the ingredients you’ll need to make your meals and any packaging material. To get an accurate estimate of your supplies costs, create a list of all the ingredients you’ll need and research how much they cost. Don’t forget to factor in things like spices, condiments, and other seasonings that may not be as expensive individually but can add up over time.
Also, remember that supplies are a variable expense, which means they can fluctuate based on market prices. For example, the cost of chicken may go up during a shortage. To account for this, it’s a good idea to have a buffer in your budget for fluctuating prices.
Overhead costs are necessary to run your business but aren’t directly related to making the food, such as rent, utilities, and insurance. To get an accurate estimate of your overhead costs, create a list of all the monthly expenses you’ll need to pay and add them up.
Marketing costs are those associated with promoting and selling your meal prep business. This can include creating a website, advertising, and social media. To get an accurate estimate of your marketing costs, make a list of all the marketing activities you plan to do and research how much they’ll cost.
Labor costs are those associated with the people who make and sell your food. This can include things like wages, benefits, and training. To get an accurate estimate of your labor costs, create a list of all the employees you have and research how much you’ll need to pay them.
Factor in Waste
In the meal prep industry, it’s not enough to just factor in the cost of the ingredients – you also need to factor in waste. This is because meal prep often involves pre-cooking or chopping ingredients, which can result in wasted food. Furthermore, some food may not be eaten and will need to be thrown away. To account for this, you’ll need to factor in a waste percentage when calculating your prices.
Determine Your Ideal Profit Margin
Once you’ve calculated all your costs, you need to determine your ideal profit margin. This is the percentage of each sale you want to keep as profit. For example, if you want to keep 20% of each sale as profit, your profit margin would be 20%.
To determine your ideal profit margin, consider how much competition there is in your area and what other meal prep businesses are charging. You’ll also need to factor in your own business goals. For example, if you’re just starting out, you may want to keep your profit margin lower so that you can attract more customers.
For reference, most meal prep businesses have a 15-20% profit margin.
Calculate Your Price
Once you’ve determined your ideal profit margin, you can calculate your price. To do this, simply take your costs and multiply them by (1 + profit margin).
For example, if you want to keep a 20% profit margin and your meal prep business has the following costs:
- Supplies: $100
- Overhead: $200
- Marketing: $50
- Labor: $75
Your price would be:
($425 x 1.2) = $510
Pricing meal prep can be challenging, but it’s important to ensure you’re covering all of your costs and making a profit. By following the steps above, you can be sure that you’re charging the right price for your meal prep business.