How to Price Marshmallows: A Bag of 12, With a Calculator

To price a bag of 12 marshmallows you add up its full cost first: the gelatin, sugar and syrup by the batch, your time at an hourly rate, the bag, header card and label, and a share of overhead like rent and power. That's what one bag costs you. Then set the price so that, after card and selling fees, it leaves the margin you want: price = full cost ÷ (1 − margin − fee rate). For a bag of 12 that costs $5.78 to make, a 45% margin after 3% fees means $11.12, rounded up to $11.50. The ingredients are cheap; whipping, setting, cutting and dusting by hand are most of a bag's cost. A café pays less and sells them with hot chocolate. In the example below, a Connecticut marshmallow maker prices its bags for markets and a café.

The short version

• Full cost = gelatin, sugar and syrup a bag + your time + bag and header card + overhead.
• Price = full cost ÷ (1 − margin − fee rate).
• Count your time at a real hourly rate, even if you don't pay yourself yet.
• Time the cutting and dusting: it's most of the cost.
• Flavors with fruit purée or chocolate cost more; price them apart.
• Check what wholesale leaves after full cost before saying yes.
• TaroStack costs each bag of marshmallows from its recipe and what each batch used. More below.

What goes into a bag's cost

The business's year is in marshmallow business plan, and bags and tins in how to package marshmallows for sale.

An example: a bag of marshmallows

Litchfield Hills Marshmallow Co., the made-up marshmallow maker in Torrington, Connecticut, I use in these examples, sets two pans of vanilla marshmallows at a time and cuts them into eight bags of 12:

At a 45% margin after 3% card fees, the price is $5.78 ÷ 0.52 = $11.12, so $11.50. At $11.50 a bag, each leaves $5.37. The market had said $10.00, which leaves $3.92. A café at $7.50 leaves $1.49 a bag, and sells a marshmallow with every hot chocolate in winter. Pricing other candy works the same way, in how to price candy.

Get the calculator

Download the marshmallow price calculator. One sheet: type the batch's ingredients, amounts and costs, the bags it makes, the hands-on minutes, the bag and overhead, your hourly rate, card fees and the margin you want; the full cost, the price for your margin rounded up, and what a wholesale price and a test price leave 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 prices one flavor. Raspberry and peppermint cost more, a humid day makes a slab sticky to cut, and the holiday rush changes how fast every bag is made.

How TaroStack does it

TaroStack costs each bag of marshmallows from its recipe and from what each batch used.

Recipes by weight. Each bag of marshmallows is a recipe, with unit conversion from the case or sack to the gram.

True cost from the batch. Each batch takes ingredients at their real cost, from the deliveries they came from, so a price rise shows up in the next batch.

Price creep. A price-creep report per supplier shows which ingredient is quietly costing more.

Recipes, batches and true cost 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.

Questions people also ask

How much should I charge for a bag of marshmallows?

Work out the full cost, gelatin, sugar, syrup, your time, the bag and overhead, then divide by 1 minus your margin and fee rate; the example's $5.78 bag prices at $11.50 for a 45% margin.

How do you calculate the cost of a bag of marshmallows?

Add the batch's ingredients and divide by the bags it makes, then add your time, the bag and a share of overhead.

What is a good profit margin on bags?

Set your own target after fees; the example uses 45% on direct sales and accepts less on wholesale.

How much does it cost to make marshmallows?

In the example, about $1.35 of ingredients a bag of 12; with time, the bag and overhead, $5.78.