📝 Anyone who sells food · ⏱️ 3 min read

How do I set the price of prepared products when I need...

📝 KitchenNmbrs — · updated 06 Apr 2026

Quick answer
Prepared products like soup, sauces or pre-baked items cost more than just ingredients - your time and your team's time costs money too. Many entrepreneurs forget to include labor costs in their cost price, which means they unknowingly lose money on homemade products.

Prepared products like soup, sauces or pre-baked items cost more than just ingredients - your time and your team's time costs money too. Many entrepreneurs forget to include labor costs in their cost price, which means they unknowingly lose money on homemade products. Here's how to correctly factor labor costs into your selling prices.

Why labor costs are crucial

Making tomato soup isn't just about paying for tomatoes, onions and broth. You're also paying for the time your chef spends chopping, cooking and finishing. Those labor costs can make up 20-40% of your total cost price.

⚠️ Heads up:

Most kitchens only calculate ingredient costs and forget labor costs. That's why their food cost looks like 25%, but it's actually 35-40%.

Calculate your hourly rate for the kitchen

Before you can factor in labor costs, you need to know what an hour of kitchen work costs. This goes way beyond just your chef's salary - it's the kind of thing you only learn after closing your first month at a loss.

  • Chef's gross wage: for example €18 per hour
  • Employer contributions: 25-30% extra (€4.50-€5.40)
  • Vacation pay, sick leave: 15% extra (€2.70)
  • Total hourly rate: €25-€26 per hour

? Example:

Chef earns €18 gross per hour:

  • Gross wage: €18.00
  • Employer contributions (28%): €5.04
  • Vacation pay/sick leave (15%): €2.70

Actual hourly rate: €25.74

Measure preparation time realistically

Count all the time needed for the product, from start to finish. Not just active cooking time, but also prep and finishing work.

  • Mise-en-place: chopping vegetables, getting ingredients ready
  • Active preparation time: frying, cooking, stirring
  • Finishing: tasting, seasoning, portioning
  • Cleanup: washing pans used specifically for this product

? Example tomato soup (10 liters):

  • Chopping vegetables: 15 minutes
  • Frying and simmering: 45 minutes
  • Blending and straining: 10 minutes
  • Finishing and portioning: 10 minutes

Total: 80 minutes = 1.33 hours

Calculate labor costs per portion

Now you can calculate labor costs per portion. Divide the total labor costs by the number of portions you make.

Formula:
Labor costs per portion = (Preparation time in hours × Hourly rate) / Number of portions

? Example tomato soup:

10 liters soup = 40 portions of 250ml

  • Preparation time: 1.33 hours
  • Hourly rate: €25.74
  • Total labor costs: €34.23

Per portion: €34.23 / 40 = €0.86

Add up ingredients and labor costs

Your total cost price consists of ingredient costs plus labor costs. Both are equally important for your profitability. And that's where many restaurants get it wrong - they focus on one but ignore the other.

? Complete cost price tomato soup:

  • Ingredients per portion: €1.40
  • Labor costs per portion: €0.86

Total cost price: €2.26 per portion

At selling price €7.50 excl. VAT: food cost 30.1%

Labor costs matter most for these products

For some products, labor costs make up a huge part of the cost price. Pay extra attention here:

  • Sauces and dressings: lots of time, few expensive ingredients
  • Pre-baked items: bread, pastries, appetizers
  • Fresh daily products: soups, salads, prepared vegetables
  • Complex dishes: many different preparation steps

⚠️ Heads up:

With labor-intensive products, your 'food cost' can run up to 45-50% once you include labor costs. That doesn't mean it's unprofitable - it just means those are different cost items.

Work smarter with labor costs

Make it easier for yourself by working efficiently with labor costs in your cost price calculation. Tools like KitchenNmbrs can help automate these calculations once you've got your baseline numbers.

  • Make bigger batches: 20 liters of soup doesn't take 2× as much time as 10 liters
  • Standard recipes: always making the same amounts saves measuring time
  • Track your timing: time it the first time, then use the standard time
  • Seasonal products: make more during peak seasons

Related articles

How do you calculate selling price with labor costs? (step by step)

1

Calculate your actual hourly rate

Add 25-30% employer contributions and 15% for vacation pay and sick leave to your chef's gross wage. A chef earning €18/hour actually costs €25-26 per hour.

2

Measure total preparation time

Time all the steps: prep, cooking, finishing and cleanup. Also include waiting time where your chef can do other things (like simmering).

3

Calculate labor costs per portion

Multiply preparation time (in hours) by your hourly rate. Divide this by the number of portions you make. These are your labor costs per portion.

4

Add up ingredients and labor

Ingredient costs + labor costs = total cost price per portion. Use this total cost price to calculate your selling price with your desired margin.

✨ Pro tip

Track your prep times for 3 consecutive batches of the same recipe within 2 weeks. You'll often find the third batch takes 15-20% less time than the first as your team gets into rhythm.

Calculate this yourself?

In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.

Try KitchenNmbrs free →

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Frequently asked questions

Do I always need to include labor costs in my cost price?
For prepared products yes, for simple dishes (salad, steak) often not. If you spend more than 10 minutes on a dish, include labor costs.
How do I calculate labor costs when multiple people work on one product?
Add up all the time from everyone who works on it, multiply by their hourly rate and divide by number of portions. Chef 30 min + helper 15 min = total labor time.
What if I'm the one in the kitchen - do I need to factor in my time too?
Yes, your time costs money too. Calculate at least the wage you'd pay a chef, even if you don't pay yourself. Otherwise you're working for free.
Won't my dishes become too expensive if I include labor costs?
Your dishes will be realistically priced. Without labor costs you're selling below cost price and losing money without knowing it.
How often do I need to recalculate labor costs?
For new recipes always, for existing recipes 1-2× per year or when wages increase. The preparation time usually stays the same.
Should I include cleanup time in my labor cost calculations?
Yes, but only for equipment used specifically for that product. Don't include general kitchen cleaning - that's overhead, not product cost.
What about partial batches - if I make half the recipe?
Labor costs don't scale linearly. Making half a batch might take 70-80% of the time, not 50%. Test your actual prep times for different batch sizes.

kennisbank.ingredients_in_article

Tomato kennisbank.ingredient_card_meta
ℹ️ This article was prepared based on official sources and professional expertise. While we strive for current and accurate information, the content may differ from the most recent regulations. Always consult the official authorities for binding standards.

Sources consulted

Food Standards Agency (FSA) — https://www.food.gov.uk

The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.

JS

Written by

Jeffrey Smit

Founder & CEO of KitchenNmbrs

Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.

8 years kitchen manager at 1NUL8 Group Rotterdam
Expertise: food cost management HACCP kitchen management restaurant operations food safety compliance

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