Many food sellers work hard every day yet still wonder where the profit went. Usually the cause is simple: prices are set by guesswork, not by real costs. This guide shows the basic steps to calculate costs and profit properly.
1. Separate variable costs from fixed costs
Variable costs rise as sales rise — for example chicken, flour, cooking oil, sauces and packaging. Fixed costs must be paid even when sales are slow — such as site rent, equipment instalments, electricity bills and staff wages.
2. Work out the ingredient cost of one serving
Break down the cost of each ingredient by the amount used in one serving. Don’t forget small items like sauce, plastic bags and tissues — they add up over hundreds of servings a month.
Example (hypothetical figures only): if the chicken, flour and marinade for one serving cost RM3.20, cooking oil RM0.30, and sauce and packaging RM0.50, the variable cost per unit is RM4.00.
3. Set a selling price that leaves room for profit
Your selling price must cover variable costs, contribute to fixed costs and still leave a profit. Compare it with other sellers’ prices in the same area so it looks reasonable to customers.
Continuing the example: if the serving sells for RM8.00, each unit contributes RM4.00 (RM8.00 − RM4.00) towards fixed costs and profit.
4. Find your break-even point
The break-even point is the sales volume you need so you don’t make a loss. To find it, divide your total monthly fixed costs by the contribution per unit.
Continuing the example: if fixed costs are RM2,400 a month, the break-even point is RM2,400 ÷ RM4.00 = 600 servings a month, or about 24 servings a day if you trade 25 days a month. Every serving after that adds to profit.
5. Record sales and spending every day
Ingredient prices can change from month to month. Record daily sales and spending in a notebook or a phone app, then review your cost per unit at least once a month. If costs rise, you can act early — by adjusting your price, portion size or supplier.
Common mistakes to avoid
- Copying a competitor’s price without working out your own costs.
- Not paying yourself a wage, which makes profit look bigger than it really is.
- Mixing business money with personal money.
- Forgetting to count spoiled or wasted stock.
A steady supply and consistent ingredient costs make these calculations easier. Find out more about Uncle Best’s ready-to-sell products or our business packages.