Recipe Cost Calculator: Factoring in Shipping
Posted on February 10, 2015 by Lev
If you've been using the recipe cost calculator on ReciPal recently you've seen a few changes that make your recipe costing easier and more accurate. You can also read about adding hourly inputs, updating all your ingredient costs, accounting for ingredient waste in costs, and subrecipe costing. One of those changes has been an added shipping cost.
Shipping is something you 100% want to include in your recipe and unit costs. If it's something you pay for (even something you don't directly pay for like your own labor), you should include it. Otherwise you'll be in for a surprise at the end of the year when you count up your revenue and costs.
A lot of food companies make sure to order enough ingredients and packaging (and anything else that needs to be shipped) so that they qualify for free shipping. If you do, that's great and in that case your shipping will be zero and you can ignore this.
But there are always some items that you end up paying shipping for, so don't assume it's zero for everything. As mentioned in a previous post on pricing your food product and great posts like Michael Adams' on pricing food products, even a few cents increase in unit cost can affect your retail pricing and profits quite a bit.
Don't ignore shipping. It's real and may cost you.
Accounting for Shipping Costs
Now that we've included shipping in our costing tool, you can include it in any of your recipe ingredients. The shipping cost will be included as part of the food cost in the cost breakdown. Just a few things to be aware of:
- To accurately include shipping, make sure you enter the price of your full order of that ingredient and NOT the per pound (or per gallon) price. The shipping cost is relative to the full order, otherwise it will be overestimated.
- If you order several ingredients at a time, you should split the shipping among them. You can also include it for just one of the ingredients, which will keep the batch and unit cost right, but may skew the batch cost of each individual ingredient.
This is all mentioned in the information popover next to the shipping heading on the costing page as well, so you don't lose it.
Last Words, Questions, and Comments
This should be one more thing that makes costing and pricing your food product easier and more accurate.
Have questions about how to properly cost your product? Ask us by email, livechat, twitter, or leave a comment below. And as always, let us know if you have any other ideas for improving recipe costing. One thing we're thinking of doing is breaking the shipping cost into it's own category, but that might be overkill. Let us know what you think!
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