- Batch
- A group of products made together using one production run. Record the recipe version and actual yield so you can repeat the result.
- Break-even
- The point at which revenue covers the costs included in your calculation. Leaving out labor or market fees makes that point misleading.
- Contribution per unit
- The selling price minus the costs that change with each unit sold. This amount is available to cover fixed costs and profit.
- Cottage food
- Food produced under a jurisdiction's rules for home-based food businesses. The permitted products and sales channels depend on those rules.
- Cost of goods
- The costs assigned to producing the items sold. For your own pricing worksheet, state explicitly whether packaging and direct labor are included.
- Direct sale
- A sale from a producer to the end customer. Check the governing rule for whether a particular online or in-person arrangement qualifies.
- Fixed cost
- A cost that does not change with each additional unit within the period or capacity you are planning, such as a market stall fee.
- Gross revenue
- Sales before subtracting expenses. Keep any sales tax collected separate from the revenue you use to assess performance.
- Lot or batch code
- An identifier connecting a finished product to its production record, ingredient records, and date.
- Margin
- The amount left after specified costs, divided by selling price. A $10 product with $7 of included costs has a 30 percent margin on those costs.
- Markup
- The amount added to cost, divided by that cost. A $10 product with $7 of included costs has about a 43 percent markup, not a 30 percent markup.
- Overhead
- Business costs that are not easily assigned to one product, such as insurance or equipment. Use a consistent method to allocate them.
- Preorder
- An order accepted before the product's planned fulfillment date. Record the quantity, payment status, pickup arrangements, and cancellation terms.
- Sell-through
- Units sold divided by the units made available for sale over a defined period. Track samples and damage separately from sales.
- SKU
- Your identifier for a distinct sellable product and package size. A single brownie and a box of six need separate inventory counts.
- Variable cost
- A cost that changes as production or sales increase, such as ingredients, a bag for each order, or a percentage processing fee.
- Wholesale
- Selling to another business for resale. Permission to sell directly to customers does not by itself establish permission to sell wholesale.
- Yield
- The usable output from a recipe or production run. Pricing depends on the units you can actually sell, not just the theoretical recipe count.
