Selling homemade jam, sauces and pesto can be a nice side income, but only if you know what your margin is. Many people forget costs like jars, labels and time. In this article you'll learn step by step how to calculate the real profit margin on your homemade products.
Gather all costs
For a good margin calculation, you add up all costs, not just the ingredients. Many people forget the 'invisible' costs and think they're making more profit than they actually are.
💡 Example: Homemade strawberry jam
For 10 jars of 250ml:
- Strawberries (2.5 kg): €12.50
- Sugar (1 kg): €1.20
- Jars + lids (10 pieces): €8.00
- Labels: €2.00
- Gas/electricity (2 hours cooking): €1.50
Total costs: €25.20
Direct product costs
These are the costs directly linked to your product:
- Ingredients: Everything that goes in (fruit, sugar, vinegar, oil, spices)
- Packaging: Jars, lids, bags for pesto
- Labels and stickers: For branding and ingredient list
- Energy: Gas/electricity for cooking and sterilizing
⚠️ Note:
Always calculate with wholesale prices for ingredients, not what you pay for them at home in the supermarket. With larger quantities you can often buy cheaper.
Indirect costs
These costs you also incur, but they're harder to assign to one product:
- Time: Shopping, preparing, filling, labeling
- Transport: Gas to the market or customers
- Market costs: Stand fees, permits
- Equipment depreciation: Pans, mixer, scale
💡 Example: Valuing time
Making pesto takes you 3 hours (shopping, making, filling). If you value your time at €15/hour:
- Time costs: 3 × €15 = €45
- For 20 jars of pesto = €2.25 per jar extra
This determines whether it's worth the effort.
Margin calculation
Now you can calculate your real margin. The formula is simple:
Margin % = ((Selling price - Total costs) / Selling price) × 100
💡 Example: Jam margin
Strawberry jam from first example:
- Total costs: €25.20 for 10 jars = €2.52 per jar
- Selling price: €5.50 per jar
- Profit per jar: €5.50 - €2.52 = €2.98
Margin: (€2.98 / €5.50) × 100 = 54.2%
Healthy margins for homemade products
Different product types require different margins:
- Jam and jelly: 50-70% margin (high added value)
- Pesto and tapenades: 40-60% margin (more expensive ingredients)
- Sauces: 45-65% margin (depending on complexity)
- Chutneys: 50-70% margin (long shelf life)
If your margin is below 40%, you're not earning enough for the time and effort you put in.
Pricing strategy
Your selling price depends on where and how you sell:
- Farmers market: Higher prices possible through story and quality
- Online sales: Pass on shipping costs
- To restaurants: Lower prices, but larger volumes
- Local shops: Factor in retail margin of 30-50%
⚠️ Note:
When selling to shops, you need to keep your purchase price low enough so they can still make 30-50% margin. Plan this into your cost price beforehand.
How do you calculate the margin on homemade products?
Make a cost overview
Write down all costs: ingredients, packaging, labels, energy and time. Don't forget anything, not even the small amounts. This becomes your total cost price per product.
Determine your selling price
Look at what comparable products cost at markets or in shops. Take into account your sales channel - markets can have higher prices than wholesale.
Calculate your margin
Subtract your total costs from your selling price. Divide the result by your selling price and multiply by 100 for the percentage. Aim for at least 40% margin.
✨ Pro tip
Always make a test batch first and then calculate your cost price. That way you know exactly how many ingredients you need and avoid surprises.
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 time in the cost price?
Yes, otherwise you won't know if it's worth it. Calculate at least €12-15 per hour for your time, otherwise you'll earn less than minimum wage.
What is a good margin for homemade jam?
Aim for 50-70% margin on jam. The ingredients are relatively cheap and you add a lot of value through making and packaging.
How do I calculate energy costs for cooking?
Calculate approximately €0.75 per hour for a regular cooktop. For jam that cooks for 2 hours that's €1.50 in energy costs.
Should I pass on VAT in my selling price?
Below €20,000 turnover per year you're not VAT liable. Above that you must calculate 9% VAT on food products.
What if my margin comes out too low?
Raise your selling price, find cheaper ingredients or make larger batches to spread fixed costs. Below 40% margin it's not worth it.
How do I calculate packaging costs per product?
Divide the total cost of jars and labels by the number of products. A jar at €0.80 plus label at €0.20 = €1.00 packaging costs.
📚 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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