Design to a Cost

When doing food product development, you should base your concept around a cost. A lot of the time, developers get confused between the art and the commercial. Even in the restaurant industry chefs base their meals on a targeted price. In the competitive industry that is Food, commercially viable products has to be the skeleton of your development.

I can honestly say that I can make just about any product that a customer wants to sell. I can also say that not every product a customer asks for is commercially viable. As a food product development person, you are not a chef you are an industrial environment and therefore a commercial manager.

HOW to design to cost.

Simple, start of by coping, before you have left the sales office, you should be asking what product is similar to this that you want. I.e. is the product similar to a strawberry cheesecake already in production. If it is but they want it 10% cheaper than the current product you have your starting point. Just take the existing recipe and see how to reduce the cost.

That’s easy for me too products for brand new concepts, you should work extra hard to make them commercially viable, (because a lot of the time these products end up costing the business). Fundamentally, the product you are designing, fits into an existing market sector. IF so, your sales person can give you target RSP(retail sales price) , they should also be able to provide you with Margin aspirations for both customer and company. Your production team should have a good idea on OH. Do the maths to get you to a dollar price that is left to pay for ingredients and labour.

Before you go in the kitchen, at this stage you can identify is it commercially possible to make the product? I was asked to make a product the other day, which after doing the above calculation (took 10 mins). Resulted in me identifying, i could make the product but i couldn’t afford any packaging or labour.  The Expensive ingredients the customer had asked for quickly became off the shelf cheaper alternatives.

Over the years, I have seen lots of projects fail, or customers disappointed because half way through the project when everyone is committed the numbers don’t stack up. I strongly recommend using commercial assessment as the core to your development, as it leads to happy customers and business.

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