To choose between a co-packer and your own kitchen, compare the co-packer's quote per unit, plus everything it leaves out, against your loaded cost per unit. Then keep going. Your loaded cost includes your time, and a co-packer only saves you money if you use the hours it frees to sell more. On top of that, the co-packer asks for a minimum run that you pay for in one go, which ties up cash and space and puts your shelf life to the test. Do three sums: cost per unit, cash leaving your pocket each month, and cash tied up in stock.
What the quote includes (and what it does not)
A co-packer quotes per unit, but each one builds that price differently. Before you compare, pin down what is in it:
- Ingredients: do they buy them, or do you supply them?
- Packaging: do they supply the jars, lids and cases, or do you?
- Labels: often you supply them. Add them.
- Trials and recipe adjustment: scaling a recipe from a 10 litre pot to an industrial kettle does not always come out the same the first time. Ask whether the trial run is charged separately.
- Lab tests per run, if required.
- Freight from the plant to your storage or your customers.
- Storage, if the stock stays at the plant.
Everything outside the quote that you have to pay is added per unit. A cost per run, like freight, is divided by the units in the run.
Compare against your loaded cost, and against your cash
Your loaded cost per unit adds up ingredients, packaging, your time, energy and waste. It is the right number for pricing. But when you compare with a co-packer, separate your time from the rest:
- Loaded cost: what it costs to make, counting your hours.
- Cash cost: the same without your hours. This is the money that actually leaves your pocket if you keep making it yourself.
If the co-packer's quote is below your loaded cost but above your cash cost, the co-packer costs you more money every month. What it gives you back is hours. So the question becomes what you do with them: if you spend them visiting shops, opening a channel or launching a product that brings in more than the difference, it pays. If not, you are paying to work less. The guide on contribution per kitchen hour helps you put a number on your hours.
The minimum run: tied-up cash and shelf life
A co-packer will not make 200 jars. There is a minimum run, and you pay for all of it; ask whether they also want a deposit. Three things to check:
- Cash: minimum run × cost per unit, in one go. The guide on working capital shows how to tell whether your bank balance can carry it.
- Months of sales: minimum run ÷ what you sell a month. If a run lasts five months, that cash sits in cases for five months.
- Shelf life: the last jar of the run has to reach a customer with enough life left to sell. If you do not know how long your product lasts in real conditions, find out first. The guide on shelf-life tests and batch records explains how.
It is the same logic as packaging minimum orders, but with finished product, which costs far more per unit.
Worked example: pasta sauce, 700 jars a month
All the co-packer prices in this example are made up to show the sum.
You make a tomato and basil pasta sauce in 500 g jars and sell 700 a month. Your loaded cost is $4.10 a jar, of which $1.30 is your time. Today you spend six days a month producing.
The co-packer's quote (example):
- $2.95 a jar, including ingredients, jar, lid and filling
- You supply the labels: $0.20 a jar
- Freight from the plant to your storage: $210 per run
- Your visit to check the run: $105 per run in time and travel
- Minimum run: 3,500 jars
- Trial run, once: $1,000
Cost per jar with the co-packer:
- 2.95 + 0.20 + (210 ÷ 3,500 = 0.06) + (105 ÷ 3,500 = 0.03) = $3.24
The three sums:
| Your kitchen | Co-packer | |
|---|---|---|
| Loaded cost per jar | $4.10 | $3.24 |
| Cash cost per jar | 4.10 − 1.30 = $2.80 | $3.24 |
| Cash per month (700 jars) | $1,960 | $2,268 |
| Cash paid in one go | a week's worth at a time | 3,500 × 3.24 = $11,340 |
- Against your loaded cost, the co-packer saves you 4.10 − 3.24 = $0.86 a jar, or $602 a month.
- Against your cash, the co-packer costs 3.24 − 2.80 = $0.44 more a jar, or $308 more a month.
- In return, you get six days a month back.
The co-packer pays if those six days bring in more than $308 a month of new contribution, plus the $1,000 trial spread over time. If you use them to sell into new shops and sales go up, it can pay quickly. If nothing changes, you are paying $308 a month to rest, which is also a fair choice, but make it knowing the number.
The minimum run. 3,500 jars ÷ 700 a month = 5 months of sales. You need $11,340 at once and room for about 290 cases of 12. If your sauce lasts six months, the last jars reach the shop with a month to go, and that is when returns start. Either you sell faster, negotiate a smaller run, or the sum does not work yet.
Quality control and what you cannot see
In your own kitchen you taste every pot. At a plant, the run goes out with or without you. To protect the consistency of your product:
- Hand over a specification with the recipe, fill weight, and the texture and colour you expect.
- Agree an approved sample to use as the reference.
- Attend the first run and, if you can, the next ones. Those visits cost money and belong in the sum, as in the example.
- Ask for records for each run: date, quantity, batch code.
- Put in writing what happens if a run comes out wrong: who pays and who remakes it.
And before you sign, check with your local food authority what registrations and requirements apply to your product when someone else makes it.
The middle road
It is not all or nothing. Some makers keep small or seasonal products in their own kitchen and send only the best seller to a co-packer. Others grow first in a bigger space of their own, as the guide on moving from a home kitchen to a production kitchen explains. Before either, check whether a bigger batch in your own kitchen already brings the cost down enough; the guide on how batch size changes your cost per unit shows how far that goes. To take the final cost up to a shelf price, follow the guide on how to price a packaged food product.
Do it with the calculator
In the cost calculator you get your loaded cost per jar, with your time shown separately from the rest. Put it next to the co-packer's quote, plus everything the quote leaves out, and compare the three sums before you pay for the first run.
Frequently asked questions
Is a co-packer always cheaper than making it myself?
No. The quote per unit can be below your loaded cost and still cost you more cash, because your loaded cost includes your time. If that time does not turn into more sales, the co-packer costs you more money each month.
What is a co-packer's minimum run?
It is the smallest quantity they will make per order. You pay for the whole run even if it takes months to sell, so it decides how much cash and storage space you need.
Will I lose control of my recipe if I use a co-packer?
You can if nothing is in writing. Sign a confidentiality agreement, give them a product specification, and approve a sample from each run before it ships.
Who handles food safety registration when a co-packer makes my product?
It depends on the arrangement and on your local rules. Ask the co-packer what they hold, and check with your local food authority what you need as the brand owner before you sign.