How to price a product when starting a food van business

This article includes tips, suggestions and general information. We recommend that you always do your own research and consider getting independent tax, financial and legal advice before making any important decision.

So, you’ve perfected your mouth-watering menu, and you’ve got a catchy name and brand ready to rock. But as a new or aspiring street food vendor starting a food van business in the UK, pricing is just as critical a piece of the puzzle. Getting it right from the start helps you cover your ingredients and overheads while making a steady profit.

This obviously depends on the type of food you are selling, which market you’re trading in and what time of day it is. If you do a lunchtime menu in a food market in a less affluent part of the city, you may have to keep your prices down. Whereas if you’re selling during dinnertime in a posher market, you can jack the prices up a bit.

But there’s a little more to it than just that.

How much does it cost to start selling street food?

While it might not entail the level of cost associated with a bricks-and-mortar restaurant or takeaway, launching a street food venture still requires significant upfront investment across several areas:

• Vehicle purchase or conversion: A new, fully fitted food truck can range anywhere between £5,000 and £50,000¹. If you’re looking for a bespoke build, however, it could set you back even more than that. A good way to save money here is to buy a cheap van and kit it out yourself.
• Licences & permits: Street-trading licences cost £5–£30 per day, plus council application fees of £75–£500 per year; for health and hygiene certificates add another £100–£500².
• Initial stock: Ingredients and disposables usually total £1,000–£3,000 for a startup inventory, but it will depend heavily on the kind of food you intend to serve. Basic serveware (cardboard containers, napkins and wooden cutlery) adds around £300⁴ before you’ll be ready to open.
• Fuel & maintenance: Budget around £500–£1,000 for vehicle running costs in your first month⁴. If you’re operating five days a week, this should just about cover you.

All told, expect to invest at least £1,000 for a bare-bones setup, with more ambitious full food truck launches climbing potentially above £50,000.

What you need to open a food van business

Before you even consider setting up for your first service, make sure you have:

• Business plan: A solid business plan outlines the full menu, pricing, sales forecasts, and a break-even analysis. This will be your roadmap to lasting success and profitability.
• Business licence & permits: Register with your local council, secure a street-trading licence and obtain your food-hygiene certification.
• Street food menu: Don’t overdo it. A focused offering of four to six items that balance cost, prep time, and margins is vital for speed, consistency, and profit. Remember, this isn’t a restaurant.
• The right technology: A reliable POS system for card, contactless and mobile payments keep lines flowing and sales data accurate and actionable.

Review your food van business plan first

First, when starting a food van business (or any business, for that matter), it’s always wise to review your business plan and preliminary budget. What are your expenses at this point? How much are you hoping to make? How much do you need to earn to afford the produce required for your cooking? Is there a way to reduce your costs and get better prices from your suppliers?

How to price a product and set the right margins

What are the price ranges for comparable products? Just remember that it’s easy to reduce your prices, so don’t set them too low to begin with.

Ideally, you want to hit a margin of around 70%. The formula for this is:

Food cost / 0.30 = the minimum sale price

When it comes to how to price a product, food is one of the diverse products on the market, of course. For some food items, it will make sense to have lower or higher margins than this. For example, ice cream is a product that customers are willing to pay a lot for if you consider the relatively low cost of its ingredients.

Don’t rely too much on cost-based pricing if the perceived value is much higher! Likewise, you may even afford to keep negative margins on the food that really attracts the most customers to your food stall if you can make sure to cover your losses by also selling food with higher margins.

Just remember to keep proper track of your margins!

How to price a product confidently without underselling

At the end of the day, people associate quality with price. It’s instinctive human nature. If you see something that costs £7 and something that costs £5, there’s a good change you’ll assume that the £7 one is better.

Remember that the general impression people get from your food van business determines the adequate price range. If you work hard on your branding and your market stall looks exclusive and trendy, you’ll be able to charge more for the courses on your menu, ideally through our mobile card reader

Top tip: Research your market to set competitive prices

Do this today: Go for a walk around your favourite markets and check out the prices for equivalent food. Here you have your price range. It’s really that simple.