Food Cost Formula for Home Chefs (with Indian Examples)

Cost every ingredient at the rate you actually pay (wholesale or mandi rate, not MRP), for the quantity that goes into one batch.

Ingredient cost = quantity used (kg or litre) × your rate per kg or litre

Add them up for the batch. Example — a 5 kg batch of mango pickle: mangoes 4 kg × ₹60 = ₹240, mustard oil 1.2 L × ₹180 = ₹216, spices ₹90, salt ₹10. Batch ingredient cost = ₹556.

Peels, trimmings, spillage and rejected jars are real cost. Home kitchens typically lose 3–8% of input, more for fruit and leafy produce.

Adjusted ingredient cost = batch ingredient cost × (1 + wastage % ÷ 100)

At 5% wastage: ₹556 × 1.05 = ₹583.80.

Your hours are not free. Pick an hourly rate you would accept for the same work in someone else's kitchen — ₹100–₹250/hour is a common range for Indian home producers — and count prep, cooking, cooling, bottling and labelling.

Labour cost = hours spent on the batch × your hourly rate

4.5 hours × ₹150 = ₹675 for the batch.

These are the costs that quietly eat margin: LPG, electricity, water, the trip to the market, equipment wear, and consumables like jars, labels, gloves and tape. Estimate each for the batch rather than the month, or divide the monthly figure by batches per month.

Overheads = LPG + electricity + water + sourcing time and transport + equipment wear + consumables

Example: LPG ₹60, electricity ₹25, water ₹10, sourcing ₹120 (1 hour + auto fare), equipment wear ₹30, jars and labels ₹150. Overheads = ₹395.

Total batch cost = adjusted ingredients + labour + overheads

₹583.80 + ₹675 + ₹395 = ₹1,653.80 for 5 kg.

Cost per kg = total batch cost ÷ batch size in kg

₹1,653.80 ÷ 5 = ₹330.76 per kg. This is your true COGS — the number below which every sale loses money.

There are two different formulas, and mixing them is the most common pricing mistake. Markup adds a percentage to cost; margin is a percentage of the selling price.

Price with markup = cost per kg × (1 + markup % ÷ 100)

Price with margin = cost per kg ÷ (1 − margin % ÷ 100)

At ₹330.76/kg: a 30% markup gives ₹430, while a 30% margin gives ₹472.51. If a marketplace or retailer takes a commission, treat that commission as part of the margin you must cover.

Once you have a price, check what share of it goes to raw material. Packaged homemade foods usually work at a 25–40% ingredient share; much higher and there is nothing left for your time.

Food cost % = (ingredient cost per kg ÷ selling price per kg) × 100

Here: ₹116.76 ÷ ₹472.51 × 100 ≈ 24.7% — healthy, because labour and overheads are the bigger blocks, which is normal for handmade production.

Onion, oil and LPG rates in India swing sharply through the year. Re-run the formula whenever a major input moves more than about 10%, and always before you commit to a wholesale or marketplace price list.