Many butchers price like this: the wholesaler charged me so much per kilo for the carcass, I add a bit on top, and I make money. It sounds sensible, but this shortcut is exactly what quietly eats into butcher shop margins. Not every kilo you buy is saleable meat. Part of it becomes bone, part is trimmed off as fat and sinew, and part simply disappears through chilling and cutting. On top of that, tenderloin and mince are not sold at the same price, so each cut has to carry a different share of the carcass cost.
This guide walks through butcher shop pricing step by step, using the realities of the counter: measuring cutting yield, finding your true cost per kilo, allocating the carcass cost across cuts such as round, chuck, mince and bones, reading margin per cut, and updating your prices correctly when the purchase price moves. All figures are examples; fill in the same tables with your own cutting results.
Why the carcass price per kilo is not your real cost
The price on the invoice is the price of the total weight you bought. What you sell is trimmed, cut, counter-ready meat. The gap between the two comes from three places:
- Bone: A large share of any carcass is bone. It may sell cheaply as soup or stock bones, or not at all.
- Fat, sinew and trim: Pieces too fatty or sinewy even for mince are set aside, and their sales value is usually close to zero.
- Chilling and cutting loss: Meat loses moisture in the cold room, and saw and knife work removes a little more. You cannot see this loss, but the scale does.
So a butcher who buys the carcass at $5.60 a kilo and sells mince at $7.00 may believe there is $1.40 of profit in every kilo, while actually losing money. Good pricing starts with the cost of each kilo of saleable meat.
Step 1: Measure your cutting yield
Cutting yield is the weight of saleable meat divided by the carcass weight. You need to find it by actually weighing, not by guessing. The method is simple: when breaking down a carcass, put each cut into its own tray, weigh it and write it down. Bone, fat and trim, and the missing weight each get their own line. This is usually called a cutting test or yield test; repeat it on a few carcasses from the same supplier and the same type of animal and your average yield becomes clear.
Example: a 150 kg beef side is bought at $5.60 per kg, plus $90 for delivery and slaughter fees. Total cost: 150 × 5.60 + 90 = $930.
| Cut | Weight (kg) | Share of carcass |
|---|---|---|
| Tenderloin | 3 | 2% |
| Sirloin | 9 | 6% |
| Round (steaks, diced) | 30 | 20% |
| Chuck / shoulder | 22 | 14.7% |
| Mince and stewing trim | 38 | 25.3% |
| Bones (soup bones) | 27 | 18% |
| Fat, sinew, waste trim | 15 | 10% |
| Chilling and cutting loss | 6 | 4% |
| Total | 150 | 100% |
Saleable meat (tenderloin, sirloin, round, chuck, mince) adds up to 102 kg. Cutting yield: 102 / 150 = 68%. In other words, only 68 of every 100 invoiced kilos reach the counter as meat.
Step 2: Work out your true cost per kilo
Put the two calculations side by side:
- Based on the invoice (wrong): 930 / 150 = $6.20 per kg
- Based on saleable meat (right): first deduct what the bones will bring in. 27 kg of bones at $1.00 is $27. The remaining cost is 930 − 27 = $903. Divide it by 102 kg of saleable meat: $8.85 per kg
That is a gap of about $2.65 per kilo. If your prices are built on a $6.20 cost, you are paying that difference out of your own pocket on every kilo, without noticing. The first rule of butcher shop margin is therefore: divide cost by saleable meat, not by invoiced weight.
If the bones do not sell at all, there is nothing to deduct and the cost is simply 930 / 102 = $9.12. Whatever you can do with bones, fat or offal (soup bones, pet food buyers, sausage or burger mix) pulls the average cost down.
Step 3: Allocate the carcass cost across the cuts
$8.85 is an average. If you value tenderloin and mince at the same $8.85, your per-cut picture gets distorted: tenderloin looks far more profitable than it is and mince looks far weaker. There are two common ways to split the carcass cost.
Allocation by weight
Every cut gets the same cost per kilo. It is easy to calculate but misleading, because although tenderloin and mince come from the same animal at the same price, customers value them very differently. With this method, mince shows an artificially low margin and the premium cuts an artificially high one.
Allocation by sales value (recommended)
Each cut's share of the cost is proportional to its share of the total sales value you get from the carcass. That way, the cut that sells for more carries more of the cost. Three steps:
- Multiply each cut's weight by its target selling price to get the total sales value.
- Divide total cost by total sales value. This is your cost factor.
- Multiply each cut's selling price by the cost factor. The result is that cut's true cost per kilo.
| Cut | kg | Price ($/kg) | Sales value ($) | Allocated cost ($/kg) |
|---|---|---|---|---|
| Tenderloin | 3 | 32.00 | 96 | 20.44 |
| Sirloin | 9 | 22.00 | 198 | 14.05 |
| Round | 30 | 15.00 | 450 | 9.58 |
| Chuck | 22 | 13.00 | 286 | 8.30 |
| Mince | 38 | 10.50 | 399 | 6.71 |
| Bones | 27 | 1.00 | 27 | 0.64 |
| Total | 129 | 1,456 |
Cost factor: 930 / 1,456 = 0.6387. So for every $100 of meat sold from this carcass, $63.87 is cost and $36.13 is gross profit. Fat, sinew and loss have no sales value, so they do not appear in the table; their cost is already spread across the other cuts.
Step 4: Read the margin per cut
First, separate two terms that are mixed up at almost every butcher's counter:
- Margin: (Price − Cost) / Price. In the example, 36.1%.
- Markup: (Price − Cost) / Cost. In the same example, 56.6%.
A butcher who says "I put 40% on top of cost" is running a margin of about 28.6%, not 40%. If you do not pin down which one your target refers to, your prices will always come out lower than you expect.
Now look at the same carcass using the weight-based average cost ($8.85):
| Cut | Price ($/kg) | Margin, weight-based | Margin, value-based |
|---|---|---|---|
| Tenderloin | 32.00 | 72.3% | 36.1% |
| Sirloin | 22.00 | 59.8% | 36.1% |
| Round | 15.00 | 41.0% | 36.1% |
| Chuck | 13.00 | 31.9% | 36.1% |
| Mince | 10.50 | 15.7% | 36.1% |
The weight-based view leads to bad decisions such as "mince does not pay, let's raise it" or "tenderloin is so profitable we can discount it". With value-based allocation, every cut from the carcass is valued with the same factor and the margins balance out. Real differences in margin per cut show up in these situations, and that is where you should watch them:
- Cuts that do not sell: if 8 kg of mince is left at the weekend and goes on offer at $8.00, the margin on those 8 kg drops to about 16%, and the carcass margin drops with it.
- Cuts bought separately: if you buy extra boxed round or mince trim to meet demand, its cost comes from its own invoice, not from the carcass. Track its margin on its own line.
- Prepared products: turning mince into burgers or diced beef into kebabs adds seasoning, labour and loss. These need their own price line.
For a wider look at which products really earn money, the method in our product-level profitability analysis guide applies to a butcher's counter too.
How to update prices when the purchase price changes
Meat prices move often: before holidays, between seasons and with market swings, carcass prices can rise noticeably within a few weeks. Updating late is where margin disappears fastest. The basic formula is:
New selling price = New cost per kg / (1 − target margin)
Example: the carcass price rises from $5.60 to $6.00 per kg. New total cost: 150 × 6.00 + 90 = $990, an increase of 6.45%. To keep the same 36.1% margin, cut prices need to rise by roughly the same proportion:
| Cut | Old price ($/kg) | New cost ($/kg) | Proportional new price | Balanced price |
|---|---|---|---|---|
| Tenderloin | 32.00 | 21.76 | 34.06 | 34.00 |
| Sirloin | 22.00 | 14.96 | 23.42 | 23.40 |
| Round | 15.00 | 10.20 | 15.97 | 16.20 |
| Chuck | 13.00 | 8.84 | 13.84 | 14.05 |
| Mince | 10.50 | 7.14 | 11.18 | 10.90 |
| Bones | 1.00 | 0.68 | 1.06 | 1.05 |
The "balanced price" column reflects a common practice: mince is the product customers compare most, so it is held at $10.90 instead of $11.18, and the roughly $10.60 given up on mince is spread across round and chuck. Total sales value still lands at about $1,550 and the carcass margin is protected. Whichever cut you choose to hold, the rule is the same: the total sales value of the carcass must cover the new cost at your target margin.
Points to watch when you update:
- Set a trigger: for example, review the price list whenever the purchase price changes by more than 3%. Re-labelling at every small move tires customers; waiting weeks after a big rise eats your margin.
- Think replacement cost: raising prices while older, cheaper stock is still in the cold room is legitimate; what you will pay to restock is your real cost now. The reverse also applies: have a plan for when prices fall, before your competitors cut.
- Update the scale and the price board together: if the old price stays programmed in the scale, your new calculation means nothing.
Choosing suppliers: a cheap kilo can be expensive meat
Yield varies by supplier, animal age, breed and how the carcass is dressed. That is why suppliers should be compared on the cost of saleable meat, not the invoice price:
- Supplier A: $5.60/kg, 68% yield → 5.60 / 0.68 = $8.24 per saleable kg
- Supplier B: $5.40/kg, 63% yield → 5.40 / 0.63 = $8.57 per saleable kg
Supplier B is 20 cents cheaper per kilo on paper but 33 cents more expensive on every kilo that reaches the counter. Running a cutting test on several carcasses from each supplier and recording the average yield also strengthens your hand in negotiations.
Common butcher shop pricing mistakes
- Calculating cost on invoiced weight: dividing by a weight that includes bone and loss makes your cost look lower than it is.
- Forgetting delivery, slaughter fees and packaging: small-looking items add up per carcass and belong in the cost.
- Confusing margin and markup: "40% on top" is not a 40% margin.
- Giving every cut the same cost: it makes mince look unprofitable and premium cuts look better than they are.
- Never measuring loss: if chilling and trimming loss are not weighed, your yield stays a guess. For a structured way to track the sources of loss, see our guide to preventing retail shrinkage.
- Treating gross margin as net profit: rent, power, refrigeration, staff and taxes all come out of gross profit. If your gross margin does not cover them, selling more only grows the loss.
A weekly price and margin checklist
Pricing is not a one-off job. Set aside half an hour once a week:
- Compare this week's invoice prices per kilo with last week's.
- If a change crosses your trigger threshold, recalculate the cost factor.
- Check the yield from this week's cutting tests; if it drifts from the average, find out why.
- Note which cuts went on offer or were left over, and their effect on margin.
- Update the price list, scale prices and price board at the same time.
- At month end, compare total purchases, total sales and gross profit to see your real margin.
Taking the numbers out of the notebook
All of this can be done in a spreadsheet; the hard part is getting sales and invoices recorded consistently. At a busy counter nobody can note down every weighing, and a calculation built on incomplete sales data is misleading. With butcher shop software, scanning the barcode printed by the scale brings up the weight and amount automatically, and the sale deducts the weight from stock. When a wholesaler invoice is entered on the supplier's account, the products go into stock and the debt is recorded, and you can log bone, fat and trimming loss as waste.
With Welda Stock you see the per-product buy-sell margin and the end-of-day report on one screen. You set up the cutting test and cost allocation using the method above; the sales and purchase records in the program keep that calculation fed with real numbers. See Welda Stock for butchers for details.
These calculations only hold if stock is tracked by weight from carcass to counter; the daily routine is in our guide to butcher shop inventory.
Frequently Asked Questions
What is a good margin for a butcher shop?
There is no single right figure; it depends on rent, staff and sales volume. The better question is whether your gross margin covers your monthly fixed costs and leaves a profit on top. Compare total gross profit at month end with your fixed costs to find your own floor.
What is the simplest way to price meat?
Find the total carcass cost (purchase + delivery + fees), divide it by the kilos of saleable meat, then apply your target margin: price = cost per kg / (1 − target margin). For more accurate per-cut figures, use allocation by sales value.
How often should I run a cutting test?
Always when you start with a new supplier or the type of animal changes. With a regular supplier, repeating it on one or two carcasses a month is enough to spot yield drift early.
How do I account for bones and fat?
Deduct the income from bones or fat you can sell from the total cost and treat the rest as waste. Every kilo that cannot be sold loads its cost onto the saleable meat, so finding an outlet for bones and fat improves your margin directly.