Homemade products like cheese or butter seem free, but they cost time and ingredients. Many chefs forget to include these 'hidden' costs in their margin calculation, which means they unknowingly lose money. In this article, you'll learn step-by-step how to calculate the true cost price of dishes with homemade ingredients.
Why homemade products aren't free
When you churn your own butter or make cheese, it feels like it costs nothing. After all, you don't have an invoice from a supplier. But every homemade ingredient definitely has costs:
- Raw material costs: Cream for butter, milk for cheese
- Labor time: How many hours do you spend on it?
- Yield: You don't get 1 kilo of butter from 1 liter of cream
- Failure costs: Sometimes a batch goes wrong
⚠️ Watch out:
Many restaurants only calculate raw material costs and forget labor and yield. Then your margin looks higher than it really is.
Calculate the true cost price per kilo
For each homemade ingredient you need this formula:
Cost price = (Raw material costs + Labor cost) / Yield in kilos
💡 Example homemade butter:
You make butter from 2 liters of whipping cream at €4.50/liter
- Raw materials: 2 × €4.50 = €9.00
- Labor: 45 minutes × €20/hour = €15.00
- Yield: 800 grams of butter
Cost price: (€9.00 + €15.00) / 0.8 kg = €30.00/kg
Compare this to store-bought artisanal butter (€18-25/kg). Your homemade butter is more expensive than you thought.
Estimate labor costs realistically
The biggest mistake is underestimating labor time. Don't just count active time (stirring, kneading), but also:
- Preparation: Setting out ingredients, checking equipment
- Waiting time: Ripening, resting, drying - you can't leave
- Cleanup: Cleaning equipment, putting it away
- Quality control: Tasting, evaluating
💡 Example making cheese:
Fresh goat cheese from 3 liters of milk
- Milk: 3 liters × €2.20 = €6.60
- Rennet and salt: €0.40
- Labor: 2.5 hours × €22/hour = €55.00
- Yield: 600 grams of cheese
Cost price: (€7.00 + €55.00) / 0.6 kg = €103.33/kg
For labor costs, use the gross hourly wage you'd pay a chef, including employer contributions (roughly €20-25/hour for an experienced cook).
Calculate yield correctly
You never get 100% finished product from raw materials. With cheese and butter you mainly lose moisture:
- Butter from cream: Yield 35-45%
- Fresh cheese from milk: Yield 15-25%
- Aged cheese: Extra moisture loss, yield 10-18%
Measure a few batches to know your average yield. Calculate with the lowest yield you achieve, not the best.
Include failure costs
Not every batch succeeds. Cheese can become too sour, butter won't bind. Add 5-15% failure costs on top of your cost price:
Final cost price = Basic costs × (1 + failure percentage)
💡 Example with failure costs:
Your butter costs €30.00/kg basic, 10% of batches fail
- Basic costs: €30.00/kg
- Failure costs: 10%
True cost price: €30.00 × 1.10 = €33.00/kg
Calculate margin with homemade ingredients
Now that you know the true cost price, calculate the margin as usual:
Food cost % = (Total ingredient costs / Selling price excl. VAT) × 100
Add up all ingredients, including your homemade products at their true cost price.
⚠️ Watch out:
Always calculate with the selling price excluding VAT. For restaurant food that's the menu price divided by 1.09.
When is making your own worthwhile?
Compare your true cost price with purchasing from suppliers:
- Cheaper + better quality: Making your own pays off
- More expensive but unique: Can still be valuable for your concept
- More expensive and not better: Consider purchasing
Don't forget the time that becomes available for other tasks if you buy instead of make.
How do you calculate the margin with homemade ingredients?
Calculate cost price of homemade ingredient
Add raw material costs and labor cost, divide by the yield in kilos. Add 5-15% failure costs for failed batches.
Add up all ingredient costs
Make a list of all ingredients in your dish. For homemade products use the cost price from step 1, for purchased ingredients use your purchase prices.
Calculate food cost percentage
Divide total ingredient costs by your selling price excluding VAT and multiply by 100. For restaurant food divide the menu price by 1.09 to get the price excl. VAT.
✨ Pro tip
Create a standard cost price card for your homemade ingredients and update it monthly. This prevents you from unknowingly losing money when raw material prices rise.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Should I include my own time in the cost price?
Yes, always. Your time has value, even as an owner. Calculate with the hourly wage you'd pay a chef for the same work, roughly €20-25 per hour including employer contributions.
How do I know what my yield is when making cheese?
Measure a few batches: weigh the milk before and the cheese after. Divide the final weight by the starting weight for your yield. Calculate with your lowest yield, not your best.
Is making your own always more expensive than buying?
Not always, but often when you calculate honestly. The advantages usually lie in quality, uniqueness, and control over ingredients. Calculate both options to make an informed choice.
Can I skip failure costs if I'm experienced?
No, even experienced cooks sometimes have bad luck. Milk can already be sour, cream won't whip due to temperature. Calculate at least 5% failure costs, 10-15% for new recipes.
How often should I recalculate my cost prices?
Check monthly whether your raw material prices are still correct. If your supplier raises the price of milk or cream, your cost price for homemade products also rises. Update your margin calculation then.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
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.
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.
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