Loaded cost is what each unit you sell really costs you: ingredients + packaging + your time + overhead + waste, all per unit. Ingredients are only one part, and in hands-on products they are often not even the biggest. If you price from ingredients alone, the margin you think you have does not exist, and you cover the gap with your own time or money.
Why ingredients are not enough
Adding up ingredients is the first step and it is easy: you have the receipts. That is why many people stop there. But a lot more happens before a meal prep box reaches a customer:
- It goes into a container with a lid and a label.
- You spend hours cooking, portioning, sealing and washing up.
- The oven and stove use energy.
- An order gets cancelled, or a box comes out short and gets remade.
All of that costs money. If it is not in the cost, it is not in the price, and nobody else is going to pay for it.
The five parts of loaded cost
1. Ingredients. Everything in the recipe, at its price per gram, divided by the units you actually got.
2. Packaging. Container, lid, box, bag, jar, label, sticker. Every unit takes its own. See how to cost packaging and labels for detail.
3. Your time. Hands-on hours per batch times an hourly rate, divided by the units. Even if you do not pay yourself a wage, that time has value. See how to cost your own labour.
4. Overhead. Energy, water, cleaning supplies, and each unit's share of the month's running costs: phone, insurance, market fees. The guide on how to allocate overhead to products shows how to spread it by hours or batches.
5. Waste. What you make and do not get paid for: unsold units, breakages, samples. That cost is spread across the units you did sell.
loaded cost per unit sold = (ingredients + packaging + time + overhead per unit) × units made ÷ units sold
Worked example: a meal prep box
You make chicken and rice meal prep boxes in batches of 10 and sell them for $12 each.
1. Batch ingredients (10 boxes)
| Ingredient | Cost |
|---|---|
| Chicken thighs, 2 kg × $8.80 | $17.60 |
| Rice, 1 kg | $2.40 |
| Broccoli, 1.2 kg × $4.00 | $4.80 |
| Sauce, oil and spices | $5.20 |
| Total | $30.00 |
Per box: 30.00 ÷ 10 = $3.00
2. Packaging. Container, lid and label: $0.50 per box.
3. Time. One batch takes 2.5 hours of hands-on work. You pay yourself $18 an hour.
- 2.5 × 18 = $45.00 per batch
- 45.00 ÷ 10 = $4.50 per box
4. Overhead. Energy, cleaning supplies, insurance and phone come to $120 a month. You make 12 batches a month, so each batch carries 120 ÷ 12 = $10.00.
- 10.00 ÷ 10 = $1.00 per box
Subtotal: 3.00 + 0.50 + 4.50 + 1.00 = $9.00 per box made
5. Waste. One box in ten ends up unsold or remade: a late cancellation, a portion that came out short.
- 9.00 × 10 ÷ 9 = $10.00 per box sold
| Part | Per box sold |
|---|---|
| Ingredients | $3.00 |
| Packaging | $0.50 |
| Time | $4.50 |
| Overhead | $1.00 |
| Waste | $1.00 |
| Loaded cost | $10.00 |
What changes. Looking at ingredients alone, at $12 you thought you made 12 − 3 = $9 a box, a 75% margin. With the loaded cost you make 12 − 10 = $2, a margin of 16.7%. That $2 still has to carry the weeks when orders are slow.
Look at the time line too: $4.50 a box, one and a half times the ingredients. In a product like this, shaving the chicken price moves less than cooking 20 boxes per session instead of 10, if your kitchen and your orders allow it.
What loaded cost is not
It is not the price. It is the floor. You apply your margin on top of it. If you mix up markup and margin while doing that, you lose money again; markup vs margin explains why.
It is not the same as cost of goods sold. Cost of goods sold measures what the products you sold in a month cost you, so you can get to gross profit. Depending on how your books are kept, it may include only ingredients and packaging, or direct labour too. See cost of goods sold for food businesses.
It is not the number for every decision. Loaded cost mixes costs that rise with every unit (ingredients, packaging) with costs you pay regardless (phone, insurance). To decide whether to take an extra order at a discount, looking only at the variable costs serves you better. The guide to fixed vs variable costs explains when to use which.
The costs people forget most
On top of the five parts, check whether you are leaving out:
- Fuel or fares for the trip to the wholesaler.
- Card fees and delivery app commissions.
- Samples handed out at the market.
- The wear on your oven, fridge and mixer.
All of these are covered in the hidden costs of a food business. Your first calculation does not have to be perfect. It has to have no big part missing.
How to work it out without overthinking it
- Start with one product, your best seller.
- Use real receipts and a real, counted batch.
- Time yourself once with your phone.
- For energy, an honest estimate is enough.
- Note how many units go unsold over two or three weeks.
The full method, step by step with an example from start to finish, is in how to calculate the cost of a food product.
Do it with the calculator
Enter the ingredients, packaging, your time, overhead and how many units of each batch you sell into the food cost calculator, and it gives you the loaded cost per unit sold and how much each part weighs.
Frequently asked questions
Does loaded cost include rent and other fixed costs?
Yes, each unit's share of them. You spread the month's costs over what you produce in the month. If you produce less, each unit carries more.
Which part of loaded cost is usually the biggest?
It depends on the product. In simple, hands-on recipes like meal prep, brownies or filled pastries, your time can weigh as much as the ingredients or more. That is why it pays to work out each part rather than assume.
Can I sell below loaded cost?
For a while and for a specific reason, like a large order that fills capacity you had spare. As a normal price, no: every sale below loaded cost leaves you with less than you spent.
If I do not pay myself a wage, do I still count my time?
Yes. If you leave it out, your price only works while you work for free. The day you want to hire help or pay yourself, the product stops being profitable overnight.