What is cost price calculation?

Cost price calculation refers to the method used to calculate the total cost of producing or buying a product before it is sold. In a restaurant or café this usually covers the cost of ingredients such as food and drink – for example, what it costs to make a burger including the bun, patty, cheese and sides. The cost price often only includes the cost of goods and not other operating costs such as wages or rent.

The purpose of cost price calculation is to give owners and managers an overview of the contribution margin – the difference between the sales price and the cost price – so they can make decisions based on real figures and achieve healthy earnings.

An example from the restaurant industry:

If you run a café and sell a sandwich for €9, it is important to know how much it actually cost to make. If the ingredients (bread, chicken, salad and dressing) cost you €3 in total, the cost price is €3 and your gross contribution margin is €6. If you don’t keep track of your cost prices, you risk selling popular products at far too low or even negative profit.

Why does it matter for POS systems?

When you use a POS system, cost price calculation is an important part of the underlying financial management. A modern till system doesn’t just record sales – it should also help you keep track of your cost of goods and give an up-to-date overview of your finances. This makes it easier to adjust sales prices, optimise stock and make informed decisions about the menu.

How the Flexybox system works with cost price calculation

The Flexybox till system supports different methods for calculating cost price, including both the FIFO method (first in, first out) and average cost price. This lets you choose the method that best suits your needs.

When you receive goods, cost prices are updated automatically in the system. This ensures you always see the most current figures – both when you check stock and when you look at the contribution margin for your products. The till system shows the contribution margin in real time, so you can continuously follow how your business is performing financially.

Read also:

What is Average cost price?

What does bookkeeping mean in a restaurant context?

Frequently asked questions

Cost price is what it costs you to produce or buy a product. Sales price is the price you charge customers for the product. The difference between the two is called the contribution margin and shows how much you earn per unit sold.

You add up the price of all the ingredients in the dish. If you use 150 g of meat, a bun, some salad and dressing, work out the unit price of each item and add them together. The total is your cost price for the dish.

Yes, the Flexybox till system can automatically update the cost price when you record a goods receipt. This means you always have up-to-date cost prices in the system – without manual work.

It depends on your business’s needs. FIFO suits perishable goods well, while the average method gives an even price picture over time. Flexybox supports both methods, so you can choose what suits your business.