Imagine you cook jollof rice and chicken and sell 40 plates a day. Your pot is empty by 2 p.m., customers are happy, and yet by month-end you can't say whether you made money. That usually means you priced from the cost of ingredients alone. Gas, power, water, packaging, wastage and your own time were never counted.
This guide shows you how to cost a plate, a pack or a batch properly. It works for a canteen, a cake or snack business, a sauce seller or a small catering side hustle. I won't quote prices, because they change by city and by week. Use the structure here and fill in your own current quotes from your market, gas plant and electricity bill.
The five cost buckets most beginners half-count
Every plate you sell carries costs from five places. Missing any one of them is how a business that looks busy ends up losing money.
- Ingredients: everything that goes into the food, including oil, seasoning cubes, salt, onions and the water-heavy items you forget.
- Energy: cooking gas, firewood or charcoal, electricity for fridge, blender or oven, and generator fuel if power is unreliable.
- Packaging and consumables: take-away packs, foil, nylon bags, spoons, serviettes, labels, cleaning materials.
- Wastage: food that burns, spoils, is returned, or is left unsold at closing time.
- Overheads and labour: rent or stall fee, transport, phone data, helper wages, and a wage for yourself.
Step 1: Cost one batch, not one plate
Do not guess per plate. Cook a normal batch and record everything that went into it, on the day you buy. Write the receipt amount for each item, or the price you paid per measure at the market.
Use the quantity you actually used, not the whole bag. If you bought a big bag of rice and used a fraction of it, divide the bag price by the number of batches it will give you. For items like tomatoes and pepper, which vary with the season, record the date so you know your cost is current.
Then count the output. How many plates, packs or pieces did that batch honestly produce after you subtracted tasting, spillage and uneven portions? Use that number, not the one in your head.
Step 2: Work out energy for a batch
Energy is the cost people most often leave out because it is paid in lumps.
Cooking gas
Find out how much a refill costs now and how many batches it lasts. Mark the date of refill, count the batches cooked until it runs out, then divide. Do this for two or three refills because the average is more honest than one result. If you also cook for the home with the same cylinder, use a separate cylinder for the business.
Electricity and generator
If you use a prepaid meter, note units bought and the days they lasted. For a freezer or oven running all day, estimate the business share. If you run a generator, record litres of fuel per day and divide by the number of batches or plates. In many areas fuel for power is the largest hidden cost, so measure it for a full week before you decide your prices.
Firewood or charcoal
Same approach: price per bag divided by batches that bag cooks. Remember that cheaper fuel may mean slower cooking and more labour hours.
Step 3: Build wastage into the price
Some waste is normal. Fried items burn, vegetables spoil, a customer rejects a plate, or a bad day leaves you with unsold food. Track it for two weeks. At closing time, write what you threw away or gave out, and what it cost you to make.
Express wastage as a percentage: cost of wasted food divided by total cost of food made. If it is steady at, say, 8 to 10 percent, you must add that share to your price. If it is much higher, the answer is not a higher price but smaller batches, a better storage method, or a cut-off time for cooking.
A hypothetical worked example
These numbers are made up to show the method. They are not real prices. Replace each one with a current local quote.
Assume you cook one pot of jollof rice that yields 20 plates. You record:
| Item | Assumed cost (₦) |
|---|---|
| Rice, tomatoes, pepper, onions, oil, seasoning | 12,000 |
| Chicken, 20 pieces | 20,000 |
| Gas share for the batch | 1,500 |
| Power or generator share | 1,000 |
| Packs, spoon, serviette (20 sets) | 4,000 |
| Total direct cost | 38,500 |
Direct cost per plate is 38,500 divided by 20, which is ₦1,925. Now add wastage. If you assume 10 percent of food is lost, the cost of food you actually sell rises: 38,500 divided by 0.9 is about ₦42,800, or roughly ₦2,140 per sellable plate.
Next, overheads. Say your stall fee, transport, data and a helper add up to ₦90,000 a month, and you sell about 600 plates a month. That is ₦150 per plate. Your full cost is about ₦2,290 per plate.
Now decide your margin. If you want to keep 25 percent of the selling price as profit before your own pay, divide the cost by 0.75: 2,290 divided by 0.75 is about ₦3,050. Round up to a price customers will accept, such as ₦3,000 or ₦3,200, and test it. If your area will only pay ₦2,500, the example shows you the plate does not work as it is. You would change the portion, the chicken size or the recipe, not sell at a loss and hope.
This is only a model. Sales may fall short of 600 plates, and one bad week can erase a thin margin. Nothing here guarantees profit.
Step 4: Find your break-even point
Your fixed monthly costs do not change much whether you sell 100 plates or 600. Break-even is the number of plates you need to sell to cover them.
Formula: fixed monthly costs divided by (selling price minus direct cost per plate). In the example, assume a ₦3,000 price and ₦2,140 direct cost including wastage. The gap is ₦860. Divide ₦90,000 by 860 and you get about 105 plates a month, or roughly 4 a day, just to cover overheads. Below that you lose money; above it you start earning. Do this with your own numbers before you rent a shop.
Common mistakes that quietly kill food businesses
- Pricing from a competitor. Their rent, portions and supplier deals are not yours. Use their price as a check, not as your cost.
- Not paying yourself. If your wage is not in the costs, you are working for free and will resent it within months.
- Using household money as working capital. Keep business cash separate. A simple phone record helps; see our guide to pricing only if you find it on the blog, otherwise start with a notebook.
- Buying in bulk without storage. A cheap bulk purchase that spoils is not cheap. Buy perishables in amounts you can sell within days.
- Ignoring price changes. Re-cost every month, and whenever a major ingredient jumps. Many sellers shrink portions quietly instead of repricing, and customers notice.
- Extending credit to regular buyers. Unpaid plates are a cost. Limit credit to a few trusted customers and write it down.
Reduce costs without ruining the food
- Cook in bigger, planned batches so each gas refill and each hour of power covers more plates.
- Use a lid and the right pot size; a pot too large for the quantity burns gas.
- Buy staples from a market wholesaler and compare two or three suppliers monthly.
- Take pre-orders for events or office lunches so you cook what is already sold.
- Reuse leftovers safely, for example stock from bones, but never serve food that has been stored badly. Food safety failures cost far more than a lost batch.
- Choose a menu with overlapping ingredients so one purchase serves several dishes.
Permits, registration and risks in general terms
Requirements depend on what you sell and where. Selling cooked food from a stall may involve local government or market association fees and a health inspection. Packaged food sold under your own label usually raises questions about registration with the national food regulator, which in Nigeria is NAFDAC, and similar bodies exist in Ghana, Kenya and South Africa. Our posts on selling food products online and packaging and labelling cover the labelling side. Registering a business name is a separate step; see registering with CAC. Ask your local authority and the regulator directly what applies to you, because rules and fees change.
The main risks are food poisoning from poor storage, power cuts that spoil refrigerated stock, price swings in staples, theft or credit losses, and burnout. Most food businesses fail not from bad cooking but from weak cash control: no record of costs, prices set too low, and no cash buffer when a bad week arrives. Get current local quotes for everything before you commit money.
Frequently asked questions
What profit margin should I aim for?
There is no standard figure. Margins vary with product, location and volume. Calculate your full cost, add a margin that covers your wage and a small cash buffer, then check it against what customers will pay. If it doesn't fit, change the product or portion.
How often should I re-cost?
Monthly at minimum, and immediately after any big ingredient or gas price change. Keep the batch sheet in one notebook or phone note so it takes ten minutes.
Should I include my own labour?
Yes. Decide a fair daily or monthly wage and treat it as a cost. If the business cannot pay it, you need to know now.
Is it better to sell fewer plates at a higher price?
Sometimes. Fewer, better-priced sales mean less wastage and fewer hours. Test a small price rise with regular customers and watch volume for two weeks.
Your next step
This week, cook your usual batch, write every cost on paper, and count the plates it truly gives. Then work out your price with the formulas above and compare it with what you charge now.
This article is for general information only and is not financial, legal, or tax advice. Prices, rates and rules change quickly, so check current details before making money decisions.