The simple formula
Start with the meat itself, before shop expenses:
Gross profit = (kilos sold × selling price) − (kilos bought × buying price)
The key word is sold. You buy more kilos than you sell, because bones, fat and trimmings are lost when you cut. That difference is where many owners lose track of their profit.
A worked example
Say you buy 100 kg of beef at KES 560 per kilo and sell it at KES 750 per kilo. When it is cut, 6 kg ends up as waste you cannot sell.
| Kilos | KES per kg | Total KES | |
|---|---|---|---|
| Bought | 100 | 560 | 56,000 |
| Waste (bones, trimmings) | 6 | ||
| Sold | 94 | 750 | 70,500 |
| Gross profit | 14,500 |
That is KES 154 per kilo sold (14,500 ÷ 94), and a gross margin of about 20.6% (14,500 ÷ 70,500). If you had ignored the waste and assumed you sold all 100 kg, you would have expected KES 19,000, almost a third more than you really made.
Now take off your expenses
Gross profit pays for the shop. Add up what the shop costs you per day:
- Rent, divided by the days you open
- Staff wages and casuals
- Electricity for the chillers
- Transport, packaging, water and cleaning
- M-Pesa and bank charges
If those come to KES 6,000 a day and you sell 94 kg a day as in the example, your net profit is 14,500 − 6,000 = KES 8,500, or about KES 90 per kilo sold.
Mixed products: goat, mutton, chicken, matumbo
Do the same calculation for each product separately. Matumbo and offal often have a different margin from prime beef, and goat usually has more waste than boneless beef. When you look at all products together, a weak product can hide behind a strong one.
How to set a selling price
Work backwards from the margin you need:
Selling price = buying price ÷ (1 − waste share) ÷ (1 − target margin)
Using the example, with 6% waste and a 20% target margin: 560 ÷ 0.94 ÷ 0.80 = about KES 745 per kilo. Round to a price your customers are used to, then check your competitors.
Mistakes that eat your profit
- Not weighing deliveries. If the supplier delivers 97 kg and charges for 100, you lose before you sell anything.
- Guessing waste. Weigh the bones and trimmings for a few days and use the real figure.
- Credit that is never collected. A sale on credit is not profit until it is paid. Keep a list of who owes what, and how long.
- Old prices after a price change. When the supplier raises prices, recalculate the same day.
- Money that never reaches you. If kilos sold do not match the cash and M-Pesa you receive, see how to stop money and meat going missing.
Common questions
What is a good profit margin for a butchery?
Gross margins on meat are often modest, so profit comes from volume and from controlling waste and losses. Work out your own margin per product after waste, then compare it with your daily expenses.
How do I calculate profit per kilo?
Take the money from kilos actually sold, subtract what you paid for all the kilos bought (including the ones lost to bones and trimming), then divide by the kilos sold.