A pizza keeps a wide margin on its ingredients: a 14-inch cheese pie costs $4.83 in dough, sauce, cheese, the box and the card fee, and sells for $16.00, a 69.8% margin. Cheese is the biggest cost, more than the dough and sauce together. A slice keeps the most of each sale. The order that keeps the least is the same pie through a delivery app: its commission takes a quarter of the price, so the same $16.00 pie keeps 47.8%. Wages, rent and oven gas come out of the gross profit. Margin = (price − cost) ÷ price. In the example below, a month of five lines brings $46,400 of sales and about $31,010 of gross profit.
The short version
- Margin = (price − cost) ÷ price; markup = (price − cost) ÷ cost.
- A 14-inch cheese pie: $4.83, sold for $16.00, 69.8%.
- Cheese is the biggest cost in a pie.
- A slice keeps the most of each sale.
- Through a delivery app the same pie keeps 47.8%.
- TaroStack costs each pie from what each batch used. More below.
A pie, costed
Ironbound Pizza Co., the made-up pizza shop in Newark, New Jersey, I use in these examples, counts its wages as a fixed cost in its plan, so the costs below are what each pie uses:
| A 14-inch cheese pie | Cost |
|---|---|
| Dough, sauce and cheese | $3.50 |
| Box | $0.85 |
| Card fees, 3% of $16.00 | $0.48 |
| Cost | $4.83 |
The shop's year is in pizza shop business plan, and the pie's price in how to price pizza.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| 14-inch cheese pie | Counter and phone | $16.00 | $4.83 | $11.17 | 69.8% |
| 14-inch pepperoni pie | Counter and phone | $19.00 | $5.82 | $13.18 | 69.4% |
| 18-inch cheese pie | Counter and phone | $22.00 | $7.06 | $14.94 | 67.9% |
| Cheese slice | Lunch counter | $4.00 | $0.84 | $3.16 | 79% |
| 14-inch cheese pie | Delivery app, 25% commission | $16.00 | $8.35 | $7.65 | 47.8% |
The slice keeps 79%, an eighth of an 18-inch pie sold at $4.00; the app order keeps 47.8%, after the commission.
A month's numbers
A month for Ironbound Pizza Co.:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| 14-inch cheese pie, counter and phone | 900 | $14,400 | $10,053 |
| 14-inch pepperoni pie, counter and phone | 600 | $11,400 | $7,908 |
| 18-inch cheese pie, counter and phone | 300 | $6,600 | $4,482 |
| Cheese slice, lunch counter | 1,500 | $6,000 | $4,740 |
| 14-inch cheese pie, delivery app | 500 | $8,000 | $3,825 |
| Month | $46,400 | $31,008 |
Pies at the counter and on the phone bring most of the gross profit; the 500 app orders bring sales the shop wouldn't otherwise get, at a third less gross profit a pie. Every customer who orders by phone instead of through the app keeps about $3.50 more in the shop. Wages, rent and oven gas come out of the month's gross profit, in the plan. Pizzas sold frozen to grocers are in frozen pizza business plan.
Get the calculator
Download the pizza 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 per pie. Mozzarella moves by the week, a heavy hand adds an ounce of cheese a pie, and the slices thrown out at close change every margin.
How TaroStack does it
TaroStack costs each pie from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes cheese, flour and sauce 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 pie 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.