Baby food is mostly vegetables and fruit, so the produce costs little; what costs more is the care: small batches, steaming and blending, freezing in cubes, and lab tests for lead and other metals every month, which a grown-up's soup doesn't need. That cost sits on every tray. Margin = (price − cost) ÷ price. In the example below, a market tray of frozen puree cubes costs $3.57 to make and sell and goes for $9.00, a 60.3% margin. A month of four ways of selling brings $21,870 of sales and about $10,700 of gross profit.
The short version
- Margin = (price − cost) ÷ price; markup = (price − cost) ÷ cost.
- Count your time as a cost, even if you don't pay yourself yet.
- A market tray: $3.57, $9.00, 60.3%.
- Produce is the small cost; labor and lab tests are the big ones.
- Delivery boxes keep less a tray: the driving and the cold packs.
- Grocers keep the least a tray, in the biggest batches.
- TaroStack costs each tray from what each batch used. More below.
A tray, costed
Thimble Islands Kitchen, the made-up baby food maker in Branford, Connecticut, I use in these examples, freezes purees in 2-ounce cubes, about 600 trays on a production day:
| A tray of frozen puree cubes at a market | Cost |
|---|---|
| Produce | $1.20 |
| Tray and sleeve | $0.55 |
| Labor, kitchen time and the day's share of lab tests | $1.55 |
| Card fees, 3% of $9.00 | $0.27 |
| Cost | $3.57 |
The lead action levels and the testing budget are in baby food business plan, and the trays in how to package frozen food for sale.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| Puree tray | Farmers markets | $9.00 | $3.57 | $5.43 | 60.3% |
| Weekly box of 7 trays | Home delivery | $56.00 | $28.98 | $27.02 | 48.2% |
| Puree tray | Grocers, wholesale | $5.50 | $3.32 | $2.18 | 39.6% |
| Finger food bites, 8 oz | Farmers markets | $8.00 | $3.10 | $4.90 | 61.2% |
The delivery box keeps 48.2%, after the insulated liner, cold packs and the drive; the grocer's tray keeps 39.6%, but the grocer takes 1,500 a month.
A month's numbers
A month for Thimble Islands Kitchen, two years in:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| Puree tray, farmers markets | 500 | $4,500 | $2,715 |
| Weekly box of 7 trays, home delivery | 120 | $6,720 | $3,242 |
| Puree tray, grocers | 1,500 | $8,250 | $3,270 |
| Finger food bites, 8 oz, farmers markets | 300 | $2,400 | $1,470 |
| Month | $21,870 | $10,697 |
The grocer brings the most sales and the least margin a tray; the market and the boxes bring the margin. When the grocer's order grows past what one kitchen day a week can make, a co-packer starts to make sense, worked through in baby food co-packer.
Get the calculator
Download the baby food margin calculator. One sheet: one line for each product and channel, with its price, materials, packaging, labor and fee rate; the cost, gross profit, margin, markup and the price your target margin needs fill in. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The calculator holds one cost a tray. A month when sweet potatoes cost twice as much, or a lab result that sends a lot of carrots back, changes every tray, and only the batch records show which trays it touched.
How TaroStack does it
TaroStack costs each tray from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes produce at the price of the deliveries they came from, so a price rise shows in the next batch's cost.
Labor on the batch. The minutes a batch took are recorded on it, so the hours behind each product are on record.
Margins by product. Margins are reported per product on that actual cost, and a price-creep report per supplier shows whose prices moved.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| What a tray cost | One price from last season | Cost from the batch's deliveries |
| The hours behind a batch | Remembered | Labor minutes on the batch |
| An ingredient creeping up | Noticed late | A price-creep report |
| Margins by product | Re-worked by hand | Margins on real cost |
Recipes, batches, costing and margin reports are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.