How to price a tiffin service (with the actual math)
Many tiffin kitchens copy the price down the road and then wonder where the money went. Here is the simple maths that tells you what to charge.
· 4 min read
Ask a tiffin owner how they set their price. Often the answer is: the kitchen down the road charges $180 a month, so I charge $175. That is copying someone else's guess. It tells you nothing about your own costs.
Here is how to work out your price from your own numbers.
Start with the cost of one meal
Not one week. Not one month. One meal. You cook and sell meals, so work everything out per meal.
Cook one day's menu. Weigh what goes in. Use your last grocery bill to put a price on each part. Here is an example for a veg tiffin with dal, a sabzi, rice, four rotis and salad:
| Part of the meal | Cost (example) |
|---|---|
| Dal (lentils, onion, tomato, spices) | $0.95 |
| Sabzi (vegetable, oil, spices) | $1.35 |
| Rice | $0.40 |
| 4 rotis (flour, oil) | $0.55 |
| Salad, pickle or chutney | $0.35 |
| Container, lid, bag, label | $0.90 |
| Food and packaging | $4.50 |
Decide what share of your price goes on food
Food cost is what you spend on food and packaging, as a share of your price. It is the most useful number in a food business. A common target is 30%. Above 35%, there is little left over, and one bad month hurts. Below 25%, you may be giving small portions, or charging so much that customers leave.
To get your price, divide the cost of one meal by your target share:
| Cost of one meal | Price at 30% food cost | Price at 35% food cost |
|---|---|---|
| $4.00 | $13.33 | $11.43 |
| $4.50 | $15.00 | $12.86 |
| $5.00 | $16.67 | $14.29 |
| $5.50 | $18.33 | $15.71 |
So the $4.50 meal in our example should sell for about $15. If you charge $10 for it, your food cost is 45%. Very little is left for everything else.
Add everything else you pay
Food is not your only cost. Write down your other costs for one month. Then divide by the number of meals you make in that month. Here is an example for a kitchen making 100 meals a day, 26 days a month. That is 2,600 meals:
| Cost (example) | Each month | Each meal |
|---|---|---|
| Kitchen rent | $1,800 | $0.69 |
| Cooks' pay | $4,200 | $1.62 |
| Drivers and gas | $2,600 | $1.00 |
| Software, phone, bank and card fees | $450 | $0.17 |
| Hydro, cleaning, other | $600 | $0.23 |
| Total | $9,650 | $3.71 |
Add that to the $4.50 for food and packaging. In this example, one meal costs you $8.21 to cook and deliver. At $15, you keep $6.79 a meal. That is about 45% of the price, which is healthy.
At $10 a meal, you keep $1.79. That barely pays for your own time.
Find how many meals you need to break even
Break even means you have covered all your costs, but made no profit yet. To find it, divide your monthly costs by what each meal leaves after food and packaging. Using the example numbers:
- Monthly costs: $9,650
- Left from each $15 meal after food and packaging: $10.50 ($15 minus $4.50)
- Break even: 9,650 ÷ 10.50 = 919 meals a month, about 35 a day
In this example, every meal after 35 a day is profit. This one number tells you how many customers you need.
Build your plans from the price of one meal
Once you know your price for one meal, build your weekly and monthly plans from it. Don't pick a round monthly number first. For example:
| Plan (example) | Meals | Price |
|---|---|---|
| Trial week | 5 | $75 ($15.00 a meal) |
| Two weeks | 10 | $145 ($14.50 a meal) |
| Monthly | 22 | $302 ($13.75 a meal) |
| Monthly, lunch and dinner | 44 | $580 ($13.20 a meal) |
Longer plans get a small discount. That rewards customers who stay longer and make your week easier to plan. It is small, so you keep the profit you just worked out.
Raise prices a little every year
Grocery prices go up every year. It is easy to keep your price the same until there is no profit left. A small raise once a year, for example 4–6%, is easier for customers to accept. Tell them two weeks ahead and explain that groceries cost more. Waiting three years and then raising 20% can lose many customers at once.
Check your food cost, not just your bank balance
Your bank balance tells you what already happened. Your food cost tells you what is happening now. Say it goes from 30% to 38%. You want to know in week two, while you can still fix it. Maybe a supplier raised prices, or portions got bigger. You don't want to find out at the end of the year.
In Tiffinware, the profit and loss report shows your sales, costs, profit and food cost for any dates you pick, and how they change over time. Another report shows what each meal plan brings in and which dishes sell best. You can open the demo with sample data, without signing up.
Price from your own costs. Check your food cost every month. Raise prices a little every year.