Before you cook a new product to sell, work out its loaded cost per unit on paper, including a launch waste allowance, price it from the margin you need, and compare its contribution per kitchen hour with your current products. If it earns at least as much per hour as your weakest product and the market can pay that price, make a first full-size batch to confirm the numbers. If not, change the recipe, the size or the channel before you spend money on labels.
Step 1: cost it on paper
Write the recipe for a batch of the size you will really make. List every ingredient with the quantity and the price you pay at your usual wholesaler or supermarket, and estimate the yield: how many sellable units the batch produces. In sauces and preserves, yield drops with what evaporates and what stays in the pan; in doughs, with what sticks to the bench.
Then build the loaded cost per unit: ingredients + packaging + labour + overhead + waste. Your time goes in at an hourly rate, even if you are not paying yourself yet.
Step 2: add a launch waste allowance
A new product always loses more at the start: jars that do not seal, a batch that sets too thick, samples so people can taste. For the first weeks, use a higher waste figure than for your established products. Recalculate the cost by dividing by the units you will actually sell, not the units that come out of the pan.
Step 3: price it from the margin
From the loaded cost, get the price with price = cost ÷ (1 − margin). The guide on how to price a food product explains how to choose that margin and how the price changes by channel.
Then look at the market. Not to copy prices, but to see whether yours is possible. If the price you need is well above what people pay, change something before you launch.
Step 4: compare it with what you already make
Every hour you give the new product comes from another one. Work out its contribution per kitchen hour (contribution margin per unit × units per hour) and put it next to your current products. If it sits far below, the new product makes you work more for the same money. The guide on how to grow a small food business explains why this comparison matters more than sales.
Step 5: add up the launch costs
Label design, moulds, tasting samples. They are one-off costs, but you still have to earn them back. Divide the total by the contribution margin per unit to see how many units you must sell just to recover the launch.
Worked example: a chilli jam
You already sell bottled hot sauce and want to add a chilli jam in 220 g jars. Prices are before tax.
Recipe for one batch (makes 30 jars):
| Ingredient | Cost |
|---|---|
| Red peppers, 3.5 kg at $3.00 per kg | $10.50 |
| Fresh chillies, 0.6 kg at $10.00 per kg | $6.00 |
| Sugar, 3 kg at $1.20 per kg | $3.60 |
| Vinegar, garlic, pectin | $6.90 |
| Total ingredients | $27.00 |
Loaded cost per jar, before waste:
- Ingredients: 27.00 ÷ 30 = $0.90
- Packaging: jar and lid $0.85 + label $0.25 = $1.10
- Labour: 3 hours × $15.00 = $45.00 per batch, ÷ 30 = $1.50
- Energy and overhead: $0.30
- Total: 0.90 + 1.10 + 1.50 + 0.30 = $3.80
Launch waste. You expect 3 jars in every 30 to go on tests, failed seals and samples (10%). You sell 27, so the batch cost is spread over 27: 3.80 × 30 ÷ 27 = $4.22 per sellable jar.
Price. You want a 50% margin: 4.22 ÷ (1 − 0.50) = $8.44. You round to $8.50. Check: (8.50 − 4.22) ÷ 8.50 = 50.4%.
Suppose craft condiments of that size sell for $7 to $10 at your market. Your price fits.
Contribution per hour. The variable cost per sellable jar is everything except your labour: (0.90 + 1.10 + 0.30) × 30 ÷ 27 = $2.56. Contribution margin: 8.50 − 2.56 = $5.94. In 3 hours you make 27 sellable jars: 27 × 5.94 = $160.38, ÷ 3 = $53.46 per hour.
Your hot sauce earns $58.00 per hour. The jam comes close, so it earns its place.
The wholesale check. A deli offers $5.50 a jar. Contribution: 5.50 − 2.56 = $2.94, so 27 × 2.94 = $79.38 per batch, ÷ 3 = $26.46 per hour. Less than half of selling direct. Fine for a few jars to get on a shelf, not as the main channel.
Paying back the launch. Label design $120. Samples: 10 jars at $2.56 = $25.60. Total: $145.60. Units to recover it: 145.60 ÷ 5.94 = 24.5, so 25 jars. Most of the first batch goes on paying for the launch.
Exit rule. Before launching, you decide: if it does not sell at least 27 jars a month within six weeks, or real waste stays above 10%, the jam goes.
Check the rules before you sell
Labelling, allergen declarations and registration requirements depend on where you sell. Check your local food safety or trading standards authority before the first sale, and again before you sell through shops, which may ask for more.
When the product takes off
If the new product works, it takes hours, fridge space and oven time. At some point your kitchen may not fit everything; the guide on moving to a production kitchen helps you see whether that step pays.
And if the new product speaks to a different customer, with a different style and price, it may be a second brand rather than one more line. Read how to run more than one brand from one kitchen without mixing up their numbers.
Do it with the calculator
Put the new recipe into the food cost calculator with its yield, packaging, your time and the launch waste; it gives you the loaded cost and the price for the margin you choose, before you buy a single kilo.
Frequently asked questions
How big should the first batch of a new product be?
Your normal batch size, not a miniature test. That way the cost and time you measure are the real ones, and if it does not all sell, the loss is limited.
What waste should I assume for a product I have never made?
Assume more waste than your current products for the first few weeks, for example 10%, because there will be failed seals, tests and samples. Then adjust to what you actually lose.
Do I need to check labelling rules before launching?
Yes. Labelling, allergen and registration rules differ by country. Check with your local food safety or trading standards authority before you sell, especially if you will sell through shops.
When should I drop a new product?
Set the rule before you launch: for example, if it does not sell at least one batch a month within six weeks, or its contribution per hour stays far below your other products, it goes.