Making Gelato Is a Craft. Running a Gelato Shop Is a Business.
Many people think that being a gelato maker is a simple job. In reality, it's a business that involves many responsibilities and requires clear planning and management.
Creating new recipes and offering unique flavors is certainly the most exciting part of the job. However, a gelato shop is still a small business and, as such, it must be profitable.
One of the key challenges for a gelato entrepreneur is choosing the right selling price. Especially at the beginning, for those unfamiliar with economic and tax systems, it’s not easy. That’s why it's advisable to consult a business expert or attend specialized training courses in marketing and business management. Many professional schools offer programs specifically tailored to running a gelato shop.
How to Set the Right Price for Your Gelato
Understanding the Three Key Cost Categories
To set a price that ensures profitability, you need to consider three types of costs: direct (or prime) costs, industrial (or variable) costs, and overall (or total) costs.
1. Prime Costs (Direct Costs)
These are the costs that can be directly attributed to a specific product or service. Examples include:
- The cost of raw materials (milk, fruit, sugar, stabilizers, etc.)
- Labor costs (salaries of employees and collaborators)
2. Industrial Costs (Variable or Indirect Costs)
These costs are less straightforward but equally important. They refer to all expenses related to the production process that cannot be directly assigned to a single product. These include:
- Electricity and water used during production
- Packaging materials
- General use of equipment and tools
These costs should be proportionally allocated across the total volume of production. For instance, you might calculate how much electricity is used per kilo of gelato and include that in your cost structure.
3. Total Cost (Including Overheads)
To determine the final cost of your gelato, you must also include general overhead costs such as:
- Rent and utility bills
- Insurance
- Taxes and fees
- Marketing and advertising
- Maintenance and technical support
- Financial and administrative services
Profit = Selling Price – Total Cost
The selling price per kilo (or per portion) must exceed the total cost in order to generate profit. This margin is essential for maintaining a healthy and sustainable business.
In the first few months of operation, it’s important to track your sales and expenses closely. If profits are lower than expected, you may need to adjust your pricing or improve production efficiency to lower costs.
Practical Advice for Pricing Gelato
- Conduct a break-even analysis to understand how much you need to sell to cover your expenses.
- Review and update your prices regularly, especially when the cost of ingredients fluctuates (e.g., for seasonal fruits or premium ingredients like pistachios).
- Stay informed about trends and best practices in the gelato industry by attending trade fairs, reading specialized publications, and networking with professionals.
- Invest in business training. Even short courses on pricing, cost control, or retail management can help improve your profitability.
During recent editions of major gelato trade fairs such as SIGEP, associations have even discussed initiatives to stabilize pricing across the industry—confirming how central the topic of price is in the artisanal gelato world.
Don't Underestimate the Value of Your Work
The gelato profession is creative, rewarding, and full of passion. But to turn it into a long-term career, you must remember one essential rule:
To make a living, you need to make a profit.