Seasonal ingredient prices and how to plan around them

A seasonal ingredient can cost twice as much in its bad months, and if you costed your product at the good-month price, you make far less than you think for part of the year. To plan around it, measure how much that ingredient weighs in your cost, cost with the yearly average price rather than the cheapest one, set a price range you accept, and decide ahead of time what you will do when the price leaves that range: absorb it, change the recipe, rotate products or raise the price.

First, measure how much it affects you

Not every ingredient matters equally. A 50% rise in salt changes nothing. A 50% rise in your main ingredient can wipe out your margin.

For each product, ask two questions:

1. What share of the cost is this ingredient? Divide what you spend on it per unit by your loaded cost per unit. If it is more than about a fifth, it is worth watching.
2. How much does its price move? Look at what you paid over recent months. If there is a big gap between the lowest and highest price, it is a seasonal ingredient for you, whatever anyone else calls it.

The ones that meet both conditions need a plan. They tend to be fruit, vegetables, herbs and some fish. Dry goods move less and more slowly.

Build your own price calendar

Nobody will hand you the month-by-month prices at your farmers market or wholesaler. You have to collect them. Record every purchase with date, place, quantity and price per kilo. After a few months you see the pattern, and after a year you have your own calendar: which months an ingredient is cheap, which months it is expensive, and by how much.

That is the main reason to keep useful purchase records. A receipt in a drawer tells you nothing; a list with price per kilo and date tells you when to buy and which price to cost with.

Worked example: strawberry jam

You sell 250 g jars of strawberry jam at $9. A batch of 24 jars uses 6 kg of strawberries, so 0.25 kg per jar. The rest of the loaded cost per jar (sugar, lemon, jar, lid, label, your time and the stove) comes to $2.60. You sell about 100 jars a month, fairly evenly through the year.

Your records for the past year show you paid $4 per kg for 4 months, $6 per kg for 4 months and $10 per kg for 4 months. Those are your prices; yours will be different.

In season ($4 per kg):

• Fruit per jar: 0.25 × 4 = $1.00
• Cost per jar: 1.00 + 2.60 = $3.60
• You keep: 9 − 3.60 = $5.40, a margin of 5.40 ÷ 9 = 60%

Out of season ($10 per kg):

• Fruit per jar: 0.25 × 10 = $2.50
• Cost per jar: 2.50 + 2.60 = $5.10
• You keep: 9 − 5.10 = $3.90, a margin of 3.90 ÷ 9 = 43.3%

The gap is $1.50 per jar. At 100 jars, that is $150 less in every expensive month.

Yearly average:

• Average strawberry price: (4 × 4 + 4 × 6 + 4 × 10) ÷ 12 = (16 + 24 + 40) ÷ 12 = 80 ÷ 12 = $6.67 per kg
• Fruit per jar: 0.25 × 6.67 = $1.67
• Cost per jar: 1.67 + 2.60 = $4.27
• Margin: (9 − 4.27) ÷ 9 = 4.73 ÷ 9 = 52.6%

If your target margin is 50%, $9 works over the year even though the expensive months drop to 43%. You can keep the price steady, as long as you have the cash to get through those four months, because what you make on top in the cheap months covers what you lose in the expensive ones.

Now set a limit. Say one year strawberries reach $14 per kg out of season. Fruit per jar: 0.25 × 14 = $3.50. Cost: 3.50 + 2.60 = $6.10. Margin: (9 − 6.10) ÷ 9 = 32.2%. If that lasts longer than the usual expensive months, the yearly average no longer gives you 50%, and it is time to act.

What to do in the expensive months

Decide this before the season turns, not in front of the stall.

• Absorb it. If the yearly average still gives you your margin, do nothing. Often that is the right call.
• Make or store ahead. Jam is itself a way of preserving fruit, so you can make out-of-season stock while strawberries are cheap. Making the 400 jars you sell in the four expensive months at in-season cost saves 400 × (2.50 − 1.00) = $600. But you tie up 400 × $3.60 = $1,440 for up to four months, you need shelf space, and you need to be sure of your shelf life. Run the whole calculation before you commit.
• Change the recipe. Sometimes you can lower the share of the expensive ingredient or blend it with another fruit without customers noticing. Test flavour and yield before you sell it.
• Rotate products. Push the products whose main ingredient is cheap now and make less of the one that is expensive. Told well, a seasonal range can be part of what you offer.
• Raise the price or change the size. If the rise lasts longer than usual, that is what is left. The guide on how often to update your costs covers the signs that a change is no longer temporary.

Bring it into your weekly buying

Seasons also change what you buy each week. If you know an ingredient goes up next month, you can plan more production of that product now and less later. When you build your weekly list from what you plan to make, you use the expected price of each ingredient and see in advance what the week will cost. The guide on planning purchases from your production plan shows that step by step, and how to buy ingredients for a small food business covers the whole buying routine.

One more thing: in expensive months, comparing suppliers pays off more. A $1 per kg difference between your regular stall and a wholesaler may not justify the trip when the fruit is $4, but it can when it is $10.

Do it with the calculator

In the food cost calculator, enter your recipe at the average ingredient price, then switch to the expensive-month price; you will see at once how far your margin drops and whether your price holds.