How to choose sales channels for a food product

Choosing a sales channel means choosing how much you keep per unit, how many units you can move and how many hours it takes to move them. To decide, work out for each channel what you keep per unit after your loaded cost and the channel's own costs (commission, stall fee, the shop's margin, delivery), multiply it by what you sell in a week, and divide by the hours selling there takes. Then look at when you get paid and what you risk. The best channel is the one that pays your time best at a risk you can carry, even if it is not the one that sells the most or charges the most.

In this guide

Each channel has its own guide with the detail:

• Selling on delivery apps: commissions and pricing
• Selling wholesale to shops and cafés
• Selling at markets and fairs: costs and pricing
• Selling through WhatsApp and Instagram
• Catering and events as a sales channel
• Consignment selling: how it works and what it costs
• Preorders and subscriptions
• Corporate and bulk orders
• Comparing profit by channel

Five questions for every channel

Before you commit to a channel, answer five questions with numbers. If you cannot answer one, you do not yet know whether the channel works for you.

1. How much do you keep per unit?

Start with the price the end customer pays and take off everything that stays somewhere along the way:

• Sales tax, if your prices include it.
• The channel's share: the app's commission, the stall fee spread over what you sell, or the margin a reseller needs.
• Costs that only show up in that channel: delivery packaging, getting to the market, samples, card fees.
• Your loaded cost per unit: ingredients, packaging, your kitchen time, energy and waste.

What is left is what that channel leaves you per unit. It can be very different for the same product: the same bottle might leave you $5.20 in one channel and $2.50 in another.

2. How much will you sell?

A channel that leaves little per unit but moves a lot of volume can put more money in your pocket at the end of the month than one with a big margin and few sales. Estimate units per week from real data: what you sold at the last few markets, how many direct orders come in, how much a shop wants. If you have no data, test small before you commit.

3. How many hours does selling there take?

Your kitchen time is already inside the loaded cost. What changes from channel to channel is selling time: standing at a stall, setting up and packing down, answering messages, arranging deliveries, visiting shops, chasing payments. Write those hours down per week. Dividing what you keep by those hours gives you the most honest way to compare channels: how much you earn for each hour you spend selling.

4. When do you get paid?

At a market you are paid on the spot. With direct orders you can ask for payment upfront. A delivery app pays out on a schedule, and a shop might pay you 30 days after delivery. Until you are paid, you have already bought the ingredients. That money is real and has to come from somewhere, which is why a channel that pays late needs more working capital even when it is profitable.

5. What do you risk?

• What does not sell: at a market, leftovers can become waste. On consignment, the shop hands back what it did not sell.
• What does not get paid: a shop that pays late or closes.
• What you do not control: the app changes its terms, the market changes its dates, the shop stops ordering.

A high-risk channel needs to leave you more per unit to be worth it.

The channels, one by one

Direct sales through WhatsApp and Instagram. No middleman, so you keep the most per unit. In exchange, you put in the time to handle orders and you sort out delivery. It works best once you have customers who already know you.

Farmers markets and fairs. You are paid in cash or by card on the day, you see how people react, and you meet new customers. But the stall, travel, a helper and samples are fixed costs for the day that you have to cover before you make anything, and what you do not sell may be lost.

Delivery apps. They put you in front of people who do not know you. The commission takes a large share of the price, so you need an app-specific price and a menu built to travel.

Wholesale to shops and cafés. Less money per unit, because the shop needs its margin, but more volume for fewer selling hours. It usually comes with payment terms: you deliver now and get paid later.

Consignment. The shop displays your product and pays you only for what sells. It is an easier way in, but you carry the risk of unsold stock and products that come back past their date.

Catering and events. Big orders with a known date and quantity, and a deposit if you ask for one properly. In exchange, every quote takes time and one event can fill several days of kitchen work.

Corporate orders. Large, repeat volumes for businesses. They want invoices, payment terms and sometimes volume pricing.

Preorders and subscriptions. The customer pays before you cook. You know how much to make, waste drops close to zero and you are paid upfront. They need customers who already trust you.

Worked example: the same hot sauce in four channels

You make hot sauce in 150 ml bottles. Your loaded cost per bottle is $3.20 (chillies, vinegar, bottle, label, your kitchen time, energy and waste). To keep it simple, all prices are before sales tax.

Direct orders. You sell at $9.00. You batch local drop-offs once a week; the bag and your share of fuel come to $0.60 per bottle. You keep 9.00 − 3.20 − 0.60 = $5.20 per bottle. You sell 20 a week: 20 × 5.20 = $104.00. Messages and drop-offs take 3 hours: 104.00 ÷ 3 = $34.67 per hour.

Saturday farmers market. You sell at $9.00. The stall costs $55, you open 2 bottles for tasting (2 × 3.20 = $6.40) and fuel and parking come to $8.60. The day costs 55 + 6.40 + 8.60 = $70.00. You sell 35 bottles, so the market costs you 70.00 ÷ 35 = $2.00 per bottle. You keep 9.00 − 3.20 − 2.00 = $3.80 per bottle, or 35 × 3.80 = $133.00 for the day. Travelling, setting up, selling and packing down take 8 hours: 133.00 ÷ 8 = $16.63 per hour.

Delivery app. You list it at $10.00. Say the app charges 25%: 10.00 × 0.25 = $2.50. Extra delivery packaging costs $0.30. You keep 10.00 − 2.50 − 0.30 − 3.20 = $4.00 per bottle. You sell 12 a week: 12 × 4.00 = $48.00. Packing and handing over orders takes 1.5 hours: 48.00 ÷ 1.5 = $32.00 per hour.

Shops. You sell to them at $6.00 so they can sell at around $9.99. Delivering costs you $0.30 per bottle. You keep 6.00 − 3.20 − 0.30 = $2.50 per bottle. They take 48 a week: 48 × 2.50 = $120.00. The delivery round and invoicing take 2 hours: 120.00 ÷ 2 = $60.00 per hour. They pay at 30 days.

How to read the table:

• Per unit, direct sales win. That is why it pays to move customers from other channels to your direct orders.
• Per selling hour, shops win, even though they leave you less than half of what a direct sale does. But they pay at 30 days and you need to make 48 bottles a week to supply them.
• The market pays your time poorly: $16.63 an hour. It can still be worth it if every Saturday brings new customers who then order directly. If it does not, it is the first channel to review.
• The app sells little here. Before dropping it, check whether the product and the price are set up well on the menu.

Remember that your kitchen time is already paid inside the loaded cost. The last column shows what you earn on top of that for each hour you spend selling.

How to combine channels

Very few small food businesses live on one channel, and depending on one is a risk: if the market is cancelled or the shop stops ordering, your sales stop. A mix that works for many small brands has three parts:

1. A volume channel that keeps your kitchen steadily busy, such as shops or corporate orders.
2. A margin channel where you keep more per unit, such as direct sales or preorders.
3. A discovery channel that brings in new customers, such as a market or an app, even if it leaves less.

Your kitchen sets the limit. If you are already cooking every hour you can, adding a channel that leaves less per unit takes production away from a better one. At that point, compare channels by what each kitchen hour earns, not only each selling hour. The guide on comparing profit by channel shows how to run that calculation across all your products.

A price for each channel

The same product can have three different prices and that is fine. What cannot happen is a channel leaving you less than the minimum you need. For each channel:

• Direct sales: your list price.
• Apps: a price that covers the commission. If you want to keep the same as in direct sales, the app price is (cost + what you want to keep) ÷ (1 − commission).
• Shops: the shelf price minus the shop's margin. If the shop wants to keep 30% of the shelf price and your product sells for $9.99, your price to the shop is 9.99 × 0.70 = $6.99.
• Markets: your list price, as long as the day's sales cover the stall and the other costs.

Keep a logic you can explain. If a shop sells your bottle at $9.99 and you sell it for $7.00 online, the shop will notice that you are undercutting it. The guide on how to price a food product walks through the full method from cost to a price per channel.

Signs a channel is not working for you

• What you keep per unit is lower than what one more unit of your best product earns in another channel.
• Selling hours keep growing and the weekly total does not.
• You are always waiting for that channel to pay before you can buy ingredients.
• Waste or returns eat a fixed share of every week.
• It only works if you do not count your time.

If you see two of these, redo the numbers with data from the last four weeks. Sometimes a channel is fixed by raising the price or changing the product. Sometimes the best move is to drop it and use those hours elsewhere.

How to start

1. Work out your loaded cost per unit with real numbers.
2. Pick one or two channels where you already have customers or easy access.
3. For four weeks, write down sales, channel costs and selling hours.
4. Fill in the table above with your own numbers.
5. Decide which channel to push, which to adjust and which to try next.

You do not need to be in every channel. You need to know what each one leaves you.

Do it with the calculator

Put your recipe into the food cost calculator, then change "Channel commission (%)" for each channel; it shows the price you need with that channel's commission or margin and tax included. Write each result down and you can compare them side by side.