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Hot sauce making
All Containers›Shop by use case›Hot sauce making›Tools and directories›Break-evenShop all hot sauce and chili →
Tools

Break-even

By Dwight Davis, Founder

Updated

On this page4
Break-even is the bottle count where the year stops costing you money. It is worth calculating before the first season rather than after it.

The two kinds of cost

Fixed, per year: process filings, operator training amortized, insurance, licenses, equipment depreciation, any standing kitchen commitment, market stall fees booked for the season.

Variable, per bottle: ingredients at measured yield, packaging, the per-batch costs divided by bottles per batch.

Your own labor belongs in one of these depending on whether you pay yourself a wage or take what is left. Put it somewhere. Leaving it out is a common way a break-even comes out flatteringly wrong.

The calculation

Contribution per bottle
Selling price minus variable cost per bottle.
What each bottle contributes toward the fixed costs.
Break-even bottles
Annual fixed costs divided by contribution per bottle.
The number you must sell before the year turns positive.
Per channel
Run it separately for direct and for wholesale.
Contribution at wholesale is roughly half, so the wholesale break-even is roughly double. A plan that works direct can fail entirely on a wholesale mix.

What it tells you

Whether the price is viable at the volume you can actually produce and sell. If break-even needs more bottles than your kitchen shifts allow, the price is wrong, not the plan.

It also tells you what a second product costs. Each one adds fixed cost, a filing, a label and an inventory line, and it must clear its own break-even rather than borrowing the first product's.

Recalculate when anything structural changes: a new channel, a price change, a copacker, a second sauce. A break-even from last season is a description of last season.

References

No published source. This page is written from practice rather than from published guidance. No extension service or agency publishes on this question for hot sauce, so nothing here is cited, and it should be weighed as experience and not as a standard.
Written from published extension guidance and federal publications, not from a laboratory. Your state's requirements and your own process govern anything general said here.