How to Price Homemade Vanilla Extract, Bottle by Bottle

To price vanilla extract, cost a bottle from the beans and alcohol that go into it, plus the bottle, label and your time, then remember the months it ages before it can be sold, because that's cash spent long before it comes back. To be sold as "vanilla extract", it has to meet FDA's standard: at least 35% alcohol and at least 13.35 oz of vanilla beans per gallon, which works out to about 100 g of beans per liter. In the example below, a 4 oz bottle costs $5.01, the beans alone $2.12, and sells for $18 retail or $10.50 wholesale. Below is the standard, the bottle costed, the aging and cash, and how bean prices move the whole thing.

The short version

• FDA's standard: at least 35% alcohol, and at least 13.35 oz of beans per gallon (single-fold).
• That's about 100 g of beans per liter, or 11.8 g in a 4 oz bottle.
• The beans are the biggest cost; their price swings a lot from year to year.
• Allow for alcohol the beans soak up and keep.
• Aging takes months: count the cash and the space it ties up.
• Wholesale at cost ÷ 0.70 at the least; retail at what a shop would charge.
• TaroStack tracks every aging batch by lot and costs each bottle from the beans in it. More below.

What makes it "vanilla extract"

Under FDA's standard of identity, vanilla extract is a solution in ethyl alcohol of what can be extracted from vanilla beans, with at least 35% alcohol by volume and at least one unit of vanilla constituent per gallon (21 CFR 169.175). One unit is what's extracted from 13.35 oz of vanilla beans at no more than 25% moisture (21 CFR 169.3). Twice the beans makes "2-fold", and the label says so. Below the standard, it can't be called vanilla extract.

So the arithmetic: 13.35 oz is about 378 g, a gallon is about 3.785 liters, which comes to 100 g of beans per liter. An 80-proof vodka (40% alcohol) stays above 35% after the beans' moisture joins it. Because vanilla extract is mostly alcohol, also check what your state and the federal alcohol regulator expect of a business buying alcohol to make it. This is general information, not legal advice.

A 4 oz bottle, costed

Windward Roots, the made-up taro business I use in these examples, makes single-fold extract from grade B beans at $180 a kilo and 80-proof vodka at $8 a liter.

The beans are 42% of the cost, which makes bean price the number to watch. The spent beans can go into a second, weaker extraction or vanilla sugar, but a second extraction usually won't meet the standard alone, so don't sell it as extract unless it's topped up with fresh beans.

Margins, retail and wholesale

$10.50 leaves more than the 30% that cost ÷ 0.70 would, which extract's shelf prices support, and a shop selling at $10.50 ÷ 0.60 lands near $17.50, so $18 at your own stall sits fairly beside it. The reasoning is in how to price handmade items for wholesale.

The months it ages

Extract is usually aged for months before it's bottled. That's cost spent and shelf space taken long before a sale:

Bottling 400 bottles a quarter, aged 6 months
Batches aging at any time     2 quarters × 400 = 800 bottles' worth
Beans and vodka in the jars   800 × ($2.12 + $1.04) = $2,528

$2,528 of beans and alcohol is sitting in jars at any moment, before bottles, labels or labor. Plan for it the way a soap maker plans for curing, covered in soap business profit margin, and count the jar space as capacity, as in how to calculate production capacity.

When beans move

Vanilla prices have swung widely over the years, and a jump from $180 to $300 a kilo takes the wholesale margin from 52% to 39%. Buy beans with a price in mind for each batch, and reprice when it moves, rather than finding out at year end.

Where this stops working

Aging makes extract hard to keep track of on paper. There are jars started in March, June and September, from two bean lots at two prices, some double-fold, some single. Which jar is ready, what each bottle costs, and how much vodka and how many beans are tied up are all questions for a notebook that nobody updates. When a customer asks about a bottle, the bean lot it came from is a guess.

How TaroStack does it

TaroStack keeps each aging batch as a lot with its own dates and cost, so jars, bottles and beans all add up.

Each batch has its lot, dates and beans. A recipe holds the beans, vodka, bottles and labels. Start a batch and TaroStack takes the beans and vodka from the lots used, notes them in the batch record automatically, and gives the extract its own lot code and dates. Aging extract can sit on hold, apart from what's available to sell, until it's ready, and batch record forms print with your own checklist fields, like the start date and a strength check.

Each bottle is costed from its own beans. Beans and vodka come in at what you paid, with freight spread across the delivery, and each batch is costed from its own lots, so the March jar made with $180 beans and the September jar made with $300 beans each carry their real cost. A price-creep report per supplier shows bean prices rising, and margins are reported per product.

And the cash in the jars is visible. Stock value is kept at what it really cost, by site and type, so the beans and vodka sitting in aging jars are a number, not a guess. Shops are customers with their own orders and delivery notes, and TaroStack connects to your Shopify store.

Lots, holds and stock value are on every plan, from $49 a month; recipes, batch costs and margins on actual cost are on Standard at $99. 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.

Questions people also ask

How much does it cost to make a bottle of vanilla extract?

In the example, $5.01 for 4 oz: $2.12 of beans at $180 a kilo, $1.04 of vodka, $1.05 for the bottle and label, $0.50 of labor and $0.30 of overhead. Bean prices move the total most.

How many vanilla beans do you need per bottle?

To meet FDA's standard for vanilla extract, at least 13.35 oz of beans per gallon, about 100 g per liter, or about 11.8 g in a 4 oz bottle. Double that for 2-fold.

What alcohol percentage does vanilla extract need?

At least 35% ethyl alcohol by volume under FDA's standard. An 80-proof (40%) vodka stays above that with the beans in it.

What should I charge for homemade vanilla extract?

Price from your cost: in the example, $10.50 wholesale and $18 retail for 4 oz. Reprice when bean prices move.