how to price a food product

Have you ever seen a food or beverage priced so high you wondered why anyone would buy it? How about a product priced so low you felt like you were stealing something? It’s important to know how to price a food product so that you can stay competitive, net a positive return, and keep your business running in the long term. In this week’s post, HSR Associates talks about some of the most important factors involved in how to price a food product strategically.

Adding It All Up

As a starting point, you want to know the total cost per item for your food product. So, what’s included in your total cost of goods sold (COGS)? Well, anything you do or use to produce a finished product goes into your final product cost. This can include the following, and much more:

  • Ingredients
  • Packaging
  • Shipping costs
  • Labor (including your own!)

Always include your own labor because, as we say in business, “There’s no such thing as a free lunch.” Your work counts too! Even if you produce your product in your own house, you have to include the cost of labor. You could lose most of your gross margin if you later move to an industrial kitchen. It’s important to work with an expert food product development consultant to make sure you are accurately estimating your costs and keeping track of changes in your COGS.

Cost vs. Value

Perceived value is an extremely important factor when it comes to how to price a food product. If absolutely noone wants your product, its perceived value is $0. If people perceive your product to be worth $10 and you try to sell if at a cost of $20, you won’t get many customers. How can you determine the perceived value of your product? The answer is market research – a complex process that involves closely studying the market and the competition.

Studying the Market

Pricing is about more than just determining how much it costs to produce your product. Your food product consultant knows how to obtain the detailed data needed to price your product competitively, taking its perceived value into account. Market research is very involved, and it’s an essential part of developing an effective pricing and marketing plan. Your consultant will:

  • Study the competition and gather information about their pricing strategies and results
  • Do store checks and price surveys
  • Determine how to add more value to your product to justify a premium price
  • Develop a price list and detailed pricing strategy. An effective strategy factors in discounts, allowances, prepaid freight, bracket prices, commissions for brokers, a reasonable gross profit for your startup, and more.

How to Price a Food Product with Expert Guidance from HSR Associates

It’s clear that if you want to gain the most profit from your new food or beverage product, you need to hire professional food marketing consultants! HSR ASSOCIATES specializes in developing new food products and bringing them to market. We provide all the services necessary, from Kitchen To Marketplace. Contact us today at

More great ideas to come from our food product development experts! Stay tuned…………..