Jerky starts with an expensive ingredient and loses most of it: 40 pounds of raw beef dries to about 16, so an ounce of jerky costs close to a dollar in beef alone. That leaves a healthy margin sold direct and a thin one to shops, where the wholesale price has to cover the same beef. Margin = (price − cost) ÷ price. In the example below, a 3-ounce bag costs $5.55 to make and sell direct and goes for $10.50, a 47.2% margin. A month of four ways of selling brings $15,940 of sales and about $6,080 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 3-ounce bag direct: $5.55, $10.50, 47.2%.
- 40 pounds of raw beef dries to about 16: price the dried ounce.
- Shops at $6.50 a bag leave a thin margin.
- Gift boxes and pounds sell at a better price per ounce.
- TaroStack costs each bag from what each batch used. More below.
A bag, costed
Cedar Hollow Jerky, the made-up jerky maker in Bozeman, Montana, I use in these examples, makes beef jerky in a shared inspected kitchen:
| A 3-ounce bag, direct | Cost |
|---|---|
| Beef and marinade, 3 oz dried | $2.95 |
| Bag and label | $0.45 |
| Labor and kitchen time | $1.83 |
| Card fees, 3% of $10.50 | $0.32 |
| Cost | $5.55 |
Working out the dried ounce from the raw pound is in how to price homemade jerky, and the bags in how to package jerky for sale.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| Beef jerky, 3 oz | Direct, markets and online | $10.50 | $5.55 | $4.95 | 47.2% |
| Beef jerky, 3 oz | Shops, wholesale | $6.50 | $5.33 | $1.17 | 18% |
| Beef jerky, 1 lb | Direct | $40.00 | $27.67 | $12.33 | 30.8% |
| Gift box | Direct, holidays | $34.00 | $18.71 | $15.29 | 45% |
The shop bag keeps 18%: the shop pays $6.50 for beef that cost the same as the bag sold for $10.50. The pound keeps 30.8%.
A month's numbers
A month for Cedar Hollow Jerky:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| Beef jerky, 3 oz, direct | 800 | $8,400 | $3,964 |
| Beef jerky, 3 oz, shops | 600 | $3,900 | $702 |
| Beef jerky, 1 lb, direct | 40 | $1,600 | $493 |
| Gift box, direct | 60 | $2,040 | $917 |
| Month | $15,940 | $6,077 |
Direct bags bring most of the gross profit; the shops bring $1.17 a bag, which barely pays for the drive. The owner keeps the shops because they bring new customers to the website, and asked for $7.50 at the next order. The year is in beef jerky business plan, and the inspected kitchen's plan in jerky HACCP plan.
Get the calculator
Download the jerky 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 yield. A batch of leaner beef that dries to 15 pounds instead of 16, or a beef price that jumps a dollar a pound, changes every bag, and only the batch records show it.
How TaroStack does it
TaroStack costs each bag from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes beef and marinade 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 bag 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.