The costing sheet says one thing, the invoices say another
Every product has a costing spreadsheet somewhere. It lists the recipe by weight, the yield, the packaging, the labour per case and a price per kilo for each ingredient. Most were built when the product was launched or last re-quoted, and some of those prices have not been touched since.
Then butter goes up, a cheese supplier adds a surcharge, the film supplier moves to a new price list, and nobody is quite sure which products are now losing money on which customer.
Why costings drift
It is not carelessness. A recipe costing in a food business has a lot of moving parts, and updating them by hand across dozens or hundreds of lines is a job nobody has time for until a retailer price negotiation forces it.
- Ingredient prices sit on purchase invoices, not in the costing sheets.
- Sub-recipes, such as a sauce or a dough used in several products, are copied rather than linked.
- Packaging costs differ by pack size, and each format has its own sheet.
- Yield and process loss figures were set once and never revisited.
- Different people keep different versions of the same sheet.
What stale costings cost you
Prices are quoted to customers from numbers nobody trusts. Price increase requests go to retailers late, or without the evidence they ask for. Products that quietly stopped making money keep being made, and the ones with room in the margin get discounted in promotions without anyone checking.
It also costs the finance team days every time a customer asks for a cost breakdown or open book costing.
The costing model we build
- Recipes, sub-recipes and pack formats are loaded into one database, with sub-recipes linked so a change to a base dough or sauce flows into every product that uses it.
- Ingredient and packaging prices are taken from your purchase ledger or supplier price files, from Xero, Sage or your ERP, on a schedule you choose.
- Yield, process loss and labour per case are held against each product and can be updated by your technical or operations team.
- Every recipe is recalculated when a price changes, and a margin report shows each product and customer price against your target.
- Products that fall below the margin you set are flagged, with the ingredient changes that caused the drop listed.
- Cost breakdowns can be exported in the layout a retailer or wholesaler asks for.
| Input | Where it comes from |
|---|---|
| Ingredient prices | Purchase invoices or supplier price files |
| Recipe and sub-recipe weights | Your technical team, entered once |
| Packaging per format | Packaging supplier prices and pack specs |
| Yield and labour | Operations figures you maintain |
| Selling prices | Customer price lists |
A costing you can act on
When a supplier letter arrives announcing a price rise, you can see which products it touches and by how much before you reply. Price increase conversations with customers start from current figures. And the costing no longer depends on who last opened which spreadsheet.
The same model answers the questions that come up in new product development. The development chef or technologist can try a different cheese, a thinner film or a smaller pack and see the cost straight away, instead of asking finance to rebuild a sheet. Sales can check a proposed promotional price against the current cost before agreeing it in a meeting with a buyer.
Your own judgement still sets the prices. The model simply makes sure that judgement is working from this month's numbers rather than last year's.
Signs your costings have drifted
- You are not sure which products lost margin after the last price rises.
- Base recipes are copied into many sheets rather than linked.
- Open book costings take days to prepare.
- Promotions are agreed without checking the current cost.
- The person who built the costing sheets has left or is about to.