Pasta is flour, eggs and water, so the ingredients are cheap; what a small maker pays for is time, rolling, cutting and drying, and the tray or bag. Dried shapes made in a batch keep the best margin at a market; ravioli, filled by hand, keep the least. Margin = (price − cost) ÷ price. In the example below, a 12-ounce tray of fresh fettuccine costs $4.70 to make and sell and goes for $8.00, a 41.2% margin. A month of four ways of selling brings $13,700 of sales and about $6,160 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.
- Fresh fettuccine at a market: $4.70, $8.00, 41.2%.
- Labor is the biggest cost, not flour.
- Dried shapes made in a batch keep more at a market.
- Ravioli filled by hand keep the least.
- TaroStack costs each bag and tray from what each batch used. More below.
A tray, costed
Prairie Mill Pasta, the made-up pasta maker in Lawrence, Kansas, I use in these examples, rents a shared kitchen at $25 an hour and counts its own time at $20 an hour:
| A 12-ounce tray of fresh fettuccine at a market | Cost |
|---|---|
| Flour and eggs | $1.31 |
| Tray, film and label | $0.40 |
| Labor and kitchen time | $2.75 |
| Card fees, 3% of $8.00 | $0.24 |
| Cost | $4.70 |
How the drying works is in pasta production process, and the bags and trays in how to package pasta for sale.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| Fresh fettuccine, 12 oz | Farmers market | $8.00 | $4.70 | $3.30 | 41.2% |
| Dried rigatoni, 1 lb | Grocer, wholesale | $5.50 | $2.96 | $2.54 | 46.2% |
| Dried rigatoni, 1 lb | Farmers market | $7.00 | $3.17 | $3.83 | 54.7% |
| Ricotta ravioli, box of 12 | Farmers market | $13.00 | $8.14 | $4.86 | 37.4% |
The same bag of rigatoni keeps 54.7% at the market and 46.2% at the grocer; the ravioli keep 37.4%, because every one is filled and sealed by hand.
A month's numbers
A month for Prairie Mill Pasta:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| Fresh fettuccine, 12 oz, farmers market | 300 | $2,400 | $990 |
| Dried rigatoni, 1 lb, grocer | 1,200 | $6,600 | $3,048 |
| Dried rigatoni, 1 lb, farmers market | 300 | $2,100 | $1,149 |
| Ricotta ravioli, box of 12, farmers market | 200 | $2,600 | $972 |
| Month | $13,700 | $6,159 |
The grocer's rigatoni brings the most gross profit through volume, made in one long drying day. The ravioli earn the least for the hours they take, so they're made on market weeks only. When a bigger kitchen makes sense, and when a co-packer does, is in pasta co-packer, and the year in pasta business plan.
Get the calculator
Download the pasta 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 batch that dries badly and goes out as "pasta ends", and eggs that double in price, change the month, and only the batch records show it.
How TaroStack does it
TaroStack costs each bag of pasta from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes semolina, eggs and ricotta 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 of pasta 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.