A fudge shop can earn a gross margin above 50% on slabs sold over its own counter, less on gift boxes and much less wholesale, once the cook's time is counted. Margin = (price − cost) ÷ price, where cost is the chocolate, cream, butter and sugar, the box, the labor and the card fees. In the example below, a half-pound slab costs $5.81 to make and sell and goes for $12.75, a 54.4% margin. A month of four ways of selling brings $21,255 of sales and about $11,260 of gross profit. The margin leaks through batches that grain and go in the bin, and through chocolate bought at a new price.
The short version
- Margin = (price − cost) ÷ price; markup = (price − cost) ÷ cost.
- Count the cook's time as a cost, even if you don't pay yourself yet.
- A half-pound slab: $5.81 to make and sell, $12.75 at the counter, 54.4%.
- Gift boxes cost more in packaging; price them on their own.
- Wholesale to gift shops earns far less.
- Batches that fail are part of the cost.
- TaroStack costs each slab from what each batch used. More below.
A slab, costed
Straits Fudge Kitchen, the made-up fudge shop in Mackinaw City, Michigan, cooks chocolate fudge six pounds at a time:
| A half-pound slab, at the counter | Cost |
|---|---|
| Chocolate, cream, butter, sugar | $2.48 |
| Box and label | $0.45 |
| Labor: 90 minutes a batch of 12 at $20 an hour | $2.50 |
| Card fees, 3% of $12.75 | $0.38 |
| Cost | $5.81 |
How the slab's price was set is in how to price fudge, and wrapping it in how to package fudge for sale.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| Half-pound slab | Shop counter | $12.75 | $5.81 | $6.94 | 54.4% |
| Gift box, 1 lb | Shop and online | $26.00 | $12.53 | $13.47 | 51.8% |
| Half-pound slab | Gift shop, wholesale | $9.00 | $5.43 | $3.57 | 39.7% |
| Fudge by the piece | Festivals | $4.00 | $1.47 | $2.53 | 63.2% |
The gift box earns the most per sale, the wholesale slab the least; the counter slab is the steady middle.
A month's numbers
A summer month at Straits Fudge Kitchen:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| Half-pound slab, shop counter | 900 | $11,475 | $6,244 |
| Gift box, 1 lb, shop and online | 180 | $4,680 | $2,425 |
| Half-pound slab, gift shop | 300 | $2,700 | $1,071 |
| Fudge by the piece, festivals | 600 | $2,400 | $1,518 |
| Month | $21,255 | $11,257 |
The counter slabs bring most of the gross profit; the gift shop slabs keep the kitchen busy on slow weekdays but earn $3.57 each. One batch in fifteen grains and goes in the bin, which the counter price absorbs and the wholesale price barely does. What a candy business looks like over a year is in candy business plan.
Get the calculator
Download the fudge 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 slab. In August, with chocolate bought at two prices and a few batches lost to humid days, the margins by channel move every week.
How TaroStack does it
TaroStack costs each slab from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes chocolate and cream 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 slab 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.