An 8-ounce pouch of toffee costs $4.54 at the market, in butter, sugar, nuts and chocolate, the pouch, cooking time and the card fee, and sells for $11.50, a 60.5% margin. Gift shops pay $7.00, which keeps 40%; holiday tins keep 64.3%, and online orders keep 62.7%, with shipping charged on top. Butter is the biggest ingredient cost. Margin = (price − cost) ÷ price. In the example below, a month of four lines brings $10,030 of sales and about $5,600 of gross profit, before kitchen rent and the owner's pay.
The short version
- Margin = (price − cost) ÷ price; markup = (price − cost) ÷ cost.
- A market pouch: $4.54, sold for $11.50, 60.5%.
- Butter is the biggest ingredient cost.
- Gift shops keep 40%.
- Holiday tins and online orders keep more.
- TaroStack costs each pouch from what each batch used. More below.
A pouch, costed
Bluebonnet Toffee Co., the made-up candy maker in Dallas, Texas, I use in these examples, counts cooking and breaking time in each pouch:
| An 8-ounce pouch at the market | Cost |
|---|---|
| Butter, sugar, nuts and chocolate | $2.09 |
| Pouch and label | $0.44 |
| Cooking and breaking time | $1.67 |
| Card fees, 3% of $11.50 | $0.35 |
| Cost | $4.54 |
The pouch's price is in how to price toffee, and the business's year in toffee business plan.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| 8 oz pouch | Markets | $11.50 | $4.54 | $6.96 | 60.5% |
| 8 oz pouch | Gift shops | $7.00 | $4.20 | $2.80 | 40% |
| 1 lb holiday tin | Markets and online | $28.00 | $10.00 | $18.00 | 64.3% |
| 8 oz pouch, shipped | Online | $14.00 | $5.22 | $8.78 | 62.7% |
The holiday tin keeps 64.3%, with its tin and liner; online pouches keep 62.7%, with a mailer.
A month's numbers
A month for Bluebonnet Toffee Co.:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| 8 oz pouch, markets | 300 | $3,450 | $2,087 |
| 8 oz pouch, gift shops | 400 | $2,800 | $1,120 |
| 1 lb holiday tin, markets and online | 60 | $1,680 | $1,080 |
| 8 oz pouch, shipped, online | 150 | $2,100 | $1,317 |
| Month | $10,030 | $5,604 |
The market pouches bring the most gross profit; the gift shops buy more pouches at 40%, and carry the brand all year. Every dollar off a pound of butter saves about 20 cents a pouch. Packaging choices are in how to package toffee for sale.
Get the calculator
Download the toffee 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 pouch. Butter and pecan prices move, a batch that separates is a loss, and December changes every number.
How TaroStack does it
TaroStack costs each pouch from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes butter, nuts and chocolate 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 pouch 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.