What is the average price of an item at the grocery store and the average gross margin?


There is no real way that I know of to find an average, and I could be wrong about that.  Certainly you might find some analyst reports on public companies in a certain product category where it makes sense to assemble these averages, but for private companies, I do not know how you could assemble this data.

I think trying to arrive at this kind of data would also be very misleading, because it would depend upon how you want to use it.

If you are a brand, or vendor as it is called who sells wholesale to a retailer to resell at retail, or also called the manufacturer (although this can be misleading because so many products are produced by co-manufacturers, or 3rd party manufacturing companies that produce private label products), then this number will be specific to the category in which you sell.

In general, products with conventional and more commodity-based ingredients might make more margin than a natural or organic brand, because cost of goods sold (COGS) for these latter products are generally in the 40-70% range, at least in my experience.  Conventional may be closer to 30%, but again, that varies highly with the product category.

As a goal, I shoot for 40% or less in COGS, so my gross margin is 60% or better, and I try to shoot for a 20% net profit margin (when selling through retail), so my remaining operating expenses would be in the 40% range.  But, this is at volume, not at startup, which typically sees higher COGS and operating expenses, so much lower or negative net profit margin.

I know as a general rule of thumb, which I try to follow, CPG’s seek 20% net profit margin (when selling through retail).

I post what I see and do in consumer products. But I am just one person with my own perspective. I want your opinion and observations from your point of view. Please comment below so I and others can learn. Thank you!

About the Author:

I am a startup and growth company expert: sold 1, built 5, and crashed 2. I develop, launch and grow consumer products through uncommon methods that can lead to more sales – faster – and can make a company and its products more appealing to consumers and resellers, with less risk. More about me here.

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