Menu Pricing for Delivery Apps: The Formula That Protects Your Margin

Short answer: Correct delivery-app pricing is built on two formulas: in-store price = product cost ÷ target cost ratio (25–30% for delivery menus), then app price = in-store price ÷ (1 − effective commission). An item needing SAR 24 net at 30% commission is priced at 34.29, not 31.20 — a gap that Ballurh, from its client menu reviews, finds to be the most common silent profit leak.

Who set your prices on the delivery apps — and based on what?

In Ballurh's menu-pricing reviews with Saudi restaurant clients, the most common answer is "we looked at competitors and added a bit." The most common result: items quietly selling at a loss, buried between commission, discounts and packaging. For context, restaurants here typically run on two to four platforms at once — HungerStation, Jahez, Keeta, The Chefz — each with its own fee mechanics, which is exactly why pricing has to be built bottom-up rather than copied sideways. This guide gives you the full build, formula by formula.

Rule one: pricing starts in-store, not on the app

Customers who see your app price compare it to your in-store price. So the sequence is fixed:

1. Product cost + packaging — at 100% accuracy. If you're unsure of your cost, everything above it is built on sand; review monthly, since suppliers and packaging move.
2. In-store menu price — derived from cost, not from competitors.
3. Delivery menu price — derived from the in-store price, loaded with commission.

Healthy cost ratios across Ballurh's client network: 30–35% of selling price in-store, 25–30% on delivery menus — varying by cuisine (bakery and coffee often lower; desserts heavily driven by decoration cost). And remember: discounts never appear in the commission line — they appear here, in food cost. Details in food cost + commission.

The two formulas that govern everything

Formula 1 — in-store price from cost:

In-store price (ex-VAT) = product cost ÷ target cost ratio

A SAR 7.23 item at a 30% target: 7.23 ÷ 0.30 = SAR 24.10 ex-VAT, about 27.70 with VAT.

Formula 2 — app price from in-store price:

App price = in-store price (VAT-inclusive) ÷ (1 − effective commission to cover)

Here lives the unforgivable mistake: most operators add the commission on top (24 + 30% = 31.20). The correct move is division (24 ÷ 0.70 = 34.29). The 2.16-riyal gap is a silent per-order loss — broken down fully in the commissions guide. And because the relationship is non-linear, every commission increase demands a bigger price jump:

The rule in numbers: covering a 30% commission requires roughly a +44% increase over your in-store price, covering 40% requires about +66%, and covering 45% requires about +81% — which is why copying dine-in prices onto the app is a guaranteed loss from the very first order.

Don't cover the full commission on every item

Realistically, covering a full 30% commission on core items usually prices you out of the market. The strategy that works:

• Core items: cover part of the commission and trade some margin for volume — the app is an extra sales channel, and as long as it adds net profit on top of in-store sales, you're ahead.
• Add-ons, sauces and drinks: cover the commission fully and then some — their markups run high (sauce pricing can reach 350% of cost), and they're what push average order value past SAR 75, shrinking flat delivery fees as a percentage.
• Combos: your newly created bundle with full pricing freedom before and after discount — the cleanest honest-discount tool.

The board-level target: 33% food cost + 33% commission = 34% gross margin — the minimum acceptable scenario; lower on both counts is better.

Tiers and price twins: where a single halala pays

Some platforms — Keeta most clearly — tie the customer's delivery fee to order-value tiers: in one contract we reviewed, orders up to SAR 30 carried no fee, then the fee stepped up at each tier boundary to SAR 15 above 70. Two working rules:

1. Price at the end of a tier, not its start. At 34.99 the delivery fee equals the fee at 30.00 — but it's a smaller share of a bigger order. One halala the wrong way (35.00 instead of 34.99) can bump the order into a pricier tier and cost about SAR 4.41 per order under that contract. At a thousand orders a month, that's tens of thousands of riyals a year riding on one halala.
2. Know your price twins. Sometimes three different prices (say 26, 30 and 35) net you the same payout after fees and commission — pick the lowest: the customer pays less, volume rises, your net is unchanged.

Mind the calculation order too: in some contracts the basic commission is computed after deducting delivery and marketing fees, while bank fees apply to the post-discount amount — order changes the output. Worked examples in the Keeta tiers guide and Keeta commission guide.

Before any discount: three checks

A discount is a pricing decision, not a marketing one. Before switching it on:

1. Compute expected profit after everything at once: discount + basic commission + bank fees + delivery — never line by line.
2. Compare the result to product cost: if expected profit falls below cost, the offer is off the table no matter what volume it brings.
3. Compute campaign break-even: a SAR 1,000 campaign on an item with SAR 30 unit margin needs 33 incremental units just to break even — everything after that is the return.

The full check model with its grades (excellent/good/acceptable/forbidden) is in the safe discounts guide.

The arithmetic trick: a 10% price increase can double your profit

The formula: % increase in net profit = % price increase ÷ current net margin %.

If your net margin is 10% of sales and you raise prices 10% (costs held constant), net profit rises 100% — it doubles. At a 30% margin, the same increase lifts profit 33%. The thinner your margin, the more violently pricing moves your bottom line — in both directions. That's why quarterly price reviews aren't a luxury, and why your break-even point shifts with every change in the apps' share of your sales.

4 pricing mistakes we keep seeing

1. Pricing off competitors alone. Competitors are a ceiling reference, not a foundation — they may be mispriced at a loss themselves. Start from your cost, then compare.
2. Adding instead of dividing (31.20 instead of 34.29) — the million-riyal mistake.
3. Applying in-store ratios to the app. A 30% markup doesn't cover a 30% commission, because commission is charged on the new price, not the old one.
4. Ignoring tier boundaries. An arbitrary 35.00 instead of 34.99 pays a full fee tier for nothing.

How Ballurh helps

Pricing isn't a one-time exercise — commissions change, costs move, tiers get updated. Ballurh connects your data from HungerStation, Keeta, Jahez, The Chefz and Ninja, shows per-item profitability after effective commission and discounts, and flags the items currently selling at a loss. Ballurh clients have grown average order value by +52% by tuning pricing and offers on exactly these formulas.

How many items on your menu are selling at a loss right now? book a demo.

Frequently asked questions

How do I price an item on delivery apps?

Two steps: in-store price = cost ÷ target cost ratio (25–30% for delivery menus), then app price = VAT-inclusive in-store price ÷ (1 − effective commission). Then sanity-check against market prices and adjust how much commission each item type covers.

What's the right markup over in-store prices?

There isn't a single one — it depends on your effective commission: covering 30% requires ~44% markup, 40% requires ~66%. A flat markup (say +25% across the board) fails both ways: it loses money on cheap items and overprices expensive ones.

Should my prices cover the full commission?

On add-ons, sauces and combos — yes, and then some; their margins can carry it. On core items, usually not — cover part and trade margin for volume, as long as food cost plus commission stays under 60–80% of sales.

Why is 34.99 better than 35 on some apps?

Because on platforms like Keeta, the customer's delivery fee steps up at order-value tier boundaries. One halala over the line moves the order into a higher fee tier — worth about SAR 4.41 per order under one contract we reviewed. Price at the end of a tier, never its start.

What's a healthy food cost for a delivery menu?

Between 25% and 30% of selling price for most cuisines, versus 30–35% in-store — because app prices already run higher to carry commission. And every discount you activate raises this ratio instantly, since it lowers the real selling price