Ask The Good Food CFO: Is Rent a COGS, How to Establish Channel Margins, and the Hidden Costs of Co-Packers
(Listen on Apple or Spotify. Full transcript below.)
In this special episode of The Good Food CFO podcast, we’re sharing highlights from our live Q&A session with BABOYOT members.
These quarterly events are an awesome opportunity to connect with Founders and answer their most pressing financial questions.
Some of the topics we tackled:
Food Service vs. Wholesale Pricing: Discover why conventional wisdom about which channel is most profitable doesn't always hold true. One founder shares how running her numbers completely changed her channel strategy.
The COGS “Gray Area”: Is your kitchen rental really part of your Cost of Goods Sold? Sarah provides clarity on this common question and explains her COGS philosophy for better visibility into your true business health.
Hidden Costs of Co-packers & 3PLs? The best partners will be upfront and clear about all of the costs of doing business. Sarah shares specific questions to ask potential partners to avoid surprise fees signing with co-packers and 3PLs.
Whether you're just starting out or looking to optimize your existing food business, this episode offers real-world solutions from Sarah and the collective wisdom of our BABOYOT community.
This episode is brought to you by Settle.
Settle helps you make smarter decisions, and keep your business on track to grow sustainably. Head over to settle.com/goodfood to learn how brands like Carnivore Snax use Settle to manage their cash flow and growth.
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Episode Timeline
00:00 Introduction and Podcast Goals
07:22 Live Q&A with Baba Yacht Members
08:20 Understanding Pricing Strategies
21:53 Cost of Goods Sold vs Operating Expenses
33:27 Hidden Costs in Manufacturing and Distribution
Full Episode Transcript
This episode of the Good Food CFO podcast is sponsored by Settle.
Good Food CFO podcast. I'm your host, Sara Delevan, and with us as always is our producer, Chelsea Stier. Chelsea, what do you have for
Well, Sarah, today we are going to be seeing the live Q &A that we recently held with BABOYOT members. But before we get into that, I do want to remind everyone listening about our big goal here on the podcast. You've heard it before, but remember, we are trying to reach 1 million food founders. That is our goal. And...
There's a couple of ways that you listening at home, working out at your desk, in the car, wherever you are, can help us for free. And that is by sharing the episode, rating the podcast wherever you listen, like on Spotify or Apple, and leaving us a review. And Sarah, we got a few reviews from our recent episode about Big Spoon Roasters that I'd love to share with you. You know I love to
hear a review. Definitely hit me with a
Yeah, so we had a couple, like I said, you're going to recognize a few of these brands as I call them out as previous friends of the podcast. But the first one comes from Fishtown Pickles. And they said, this is such an awesome story. I really enjoyed this conversation. The next one came from Live Loud Foods. And she said, great episode as always.
And then the last one comes from taste me cocina. And they said, wonderful episode. So much value.
Definitely. Not just former friends of the podcast, current friends of the podcast, current favorite products that come into my house. I might be obsessed with Fishtown Pickles and Live Loud Foods. I just sent to the sweetest care package after we had them on the podcast and just really love their unique take on flavored nuts. I love them so much. And then Taste me Cocina.
I'm not familiar with you personally, but thank you, thank you, thank you so much for listening and for sending us a review as well. mean, it seems to be that folks really like these sort of case study. So that's another thing. Like when you give us a bunch of feedback on a particular type of episode, we listen, we hear you, we've got some more slated for future seasons. So thank you for that. And I think it's a good time too, Chelsea, to just remind people like we...
episodes and we hear
do this for you, the listener. So if there's a topic that you want covered, if there's a news story or a business case study, business story that you want us to dive deeper into, share that with us. We receive recommendations via DM on Instagram. You can always email us at hello at thegoodfoodcfo.com. And of course, we bring to you ideas and stories and things that we're
seeing in our world, that I'm seeing in the consulting, know, day-to-day work that I do. In this episode in particular, we're bringing you questions that our BABOYOT members have. So we really try to do our best to be like, well-rounded and always have fresh ideas on the table. And Chelsea, I just love doing these live Q &As with BABOYOT members.
and
I know, and I'm actually really sad because I didn't get to participate this time. We were glad that you weren't there. An eye thing happening. I was walking around my house with sunglasses on and an eye patch.
or something there you had. Yes.
You were kind enough to get us set up as a producer. did your producerly duties, getting in there and getting us all set up. But yeah, you had your shades on and we respectfully were like, yeah, Chels, you can hang out for this one. No need to work when you're not feeling well. But yeah, we got some really great questions. We had new BABOYOT members joining us for the first time, which is really exciting. And we talked about
Thank you everybody.
100%. Yeah.
one super common question that we hear all the time, know, cost of goods sold, right? We're talking about cogs during this Q &A. You're going to hear me say that it's kind of a gray area. It is cut and dry. You know what I mean? And so we dive into some of that. We also talk about, if I'm remembering correctly, we talk about pricing and like, you know, how pricing and margins can differ and or compare between like food service and.
Like it isn't.
there.
what I call Wholesale Direct, right? And love also the feedback and the input from the other BABOYOT members. There's very much a CFO office hours vibe in this Q &A because there is communication between members while they're there. again, one of my favorite kinds of episodes, love connecting with people. I'm going to say in real life, even though it was on Zoom, but still feels good.
live.
Absolutely. And I will add that if you're listening and you want to come to our next Q &A, right, we do these events once a quarter. This is an exclusive benefit to our BABOYOT membership. And we typically usually have a Q &A portion of that event every quarter where founders get to ask their business questions, their financial questions.
And like you said, not only will you answer and give your best take, but they sometimes will get feedback from the audience as well, which is always really, really cool. So if you're listening and you want to be a part of our next event, you can visit the goodfoodcfo.com slash BABOYOT to learn more about becoming a member.
Yeah, and I want to add to Chelsea, you know, the BABOYOT page on our website that you just referred to is also a great place to check out our impact report. This is something new that we started at the beginning of 2025. We did a full impact report. So how BABOYOT memberships, how the purchasing of, you know, tools and resources on our website, how attending CFO office hours, how all of that both supports
us here at The Good Food CFO in producing this podcast and fulfilling our mission of reaching 1 million food founders and really helping businesses done, but also has a beneficial exchange for you as well through these member events, through the courses that you have lifetime access to and to whatever you're taking away from CFO office hours. So it's also a great opportunity to kind of check that out and see how you're listening, you're rating, you're reviewing, you're purchasing, your membership, all of those things.
changing the way that food
they're helping us and how you are creating an impact. We are so excited to share that with you for the first time ever and then quarterly. And also just gives a little bit more insight into why we have membership and really why the Good Food CFO was created initially as a podcast and now as a media company and what we're striving to do. So lots to kind of take in on that page and whether you decide to become a member or not, I hope that folks will check.
shape.
it out. Yeah. All right, Sarah. Well, are you ready to get into this Q &A?
I am. I'm excited to share. Let's do it. Good food founders. Let's talk about cash flow, the metric that truly determines your ability to grow your business. We all know that figuring out your true costs, your margins and protecting cash flow isn't always straightforward as it could be when your data is
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So as I mentioned, in the intro, we are joined today live by some of our BABOYOT members, and we're here to do a live Q &A. So our very first question of the day comes from Tay. Tay, welcome to the podcast.
Thank you so much, Sarah. We're excited to be here today and I own Finale in Little Rock, Arkansas. And I have just a quick question for you. I'm to know how you go about service versus your wholesale pricing so that the wholesale price per ounce not make the...
your wonderful advice. On fire.
Amazing. Let's hear it.
pricing for foods.
will not be food service price per ounce.
and how you go about doing that.
so that the wholesale price does not make the food service price look like less or more. So I wanna make sure I understand your question. you're wanting to, may I, you're wanting to price things consistently, it sounds like. Yeah, also so that I can compete in the. Yeah. Have you chosen, this is a little background. I mean, I'm ask a couple follow up questions before I give the answer.
Yes,
food service industry.
Are you selling your food service products in different unit size and different packaging than your wholesale products? Yes, they are sold in bulk with no pack. Okay, so that's going to have a big impact on the difference in price between wholesale and food service, right? Because right off the bat, if there's no packaging, you're you are you are saving money right by not having to spend on the packaging. Therefore, you can pass that savings on to
gene.
your food service folks, right, those customers. So I think ultimately food service will be less expensive than wholesale. And that's typical. That's what we want to see. I think there's an expectation in food service that there will be savings. There's an expectation in food service that there's no fancy packaging. They don't want to pay for that, right? They want like the bucket.
or the box or the bag, right? They don't want anything fancy. They don't need a label. They just need a sticker, you know I mean? So that they know what it is. They don't need, you know, color on the packaging, anything like that. So how we typically approach food service is to go through the costing process, right? What is the cost of the product that you are selling? So you want to have your labor, you want to have your ingredients, and then you want to have whatever the packaging is that the product is going into, right? And then look at your margin.
Everybody here probably knows that I'm a big fan of that 51 % or higher margin, but take a look at that and say, okay, what makes sense for this channel? What can my minimum price be? I kind of like to start there, right? If I was to go to 51 % so that this is a cashflow positive channel, and usually food service falls in between
the direct to consumer margin and the wholesale margin. Food service is usually in between. I'll say it tends to be, if we were looking at a scale, it would tend to be a little closer to the wholesale margin. So start, like what would my lowest price be and what would my highest price be maybe to be able to compete, right? So then you've got a window and within that, you can choose the price that makes sense for your business and also makes sense for your customer.
But I don't think or I wouldn't recommend that your wholesale cost per ounce or price per ounce needs to match the food service. In fact, I think the food service should be a little bit lower. Does that make sense?
Sure, yes, thank you.
Do you have questions, feedback? Don't like it? Tell me.
think it's good. I'm just a little confused because you said that it should fall somewhere above the
Little confused.
The whole in terms of margin. Okay, got in terms of price. the price will be sorry that so good for clarifying that the price will be lower than the wholesale price, but the margin typically is higher than the wholesale price because you don't have that packaging that you have to factor into the cost. Okay, perfect. That makes sense. You're welcome.
Anybody else who's here want to add anything about maybe their experience or follow-up questions on this topic?
Hi, I'm Rachel Kane, the co-founder and CEO of Sprinkle Bites. The model that the template that you gave me is showing the same range of margins across, because I've been evaluating my price points for DTC, food service, and retailers. And the food service is in the middle of the two from a margin perspective, right? I'm charging them less.
I'm charging the DTC, my price is the highest, and then I'm charging the food service a little bit less, and then I'm charging the retailers even less. Margins are the highest for DTC and then a little bit lower for food service, but closer to wholesale.
Okay.
So your food service price per ounce, let's say, is actually higher for food service than it is for wholesale.
Yeah, and what was very surprising is that until I put the numbers down in that template, everyone advised me that wholesale was going to be the most profitable channel for me. And then I need to go talk to big, huge bakeries and big, huge acai bowl franchises and, you know, all of those corporate places like private schools like Goddard and Malvern's, right? That have chefs that have menus. Any one of those.
technically food service customers will be my most profitable. And I did the math and it's not. And that's why I changed my strategy to not launch there first. I will enter that channel and I probably will have like one or two anchors in that channel at launch. But everything else is not, I'm not focusing on that channel on day one.
Yeah. And I love that you bring that up too, because when we say like typically, right, it doesn't mean 100 % of the time. I'm curious. So I'm curious because food service is usually like the strategy is usually to get that price per ounce lower because that customer has to turn it into a dish or turn it into something in order to sell it, right? And so
we usually, again, usually wanna have that cost be lower to them. Whereas that wholesaler is reselling it, but they don't have to do, there's no additional cost to them to turn it into something. You know what I mean? So when you're selling as an ingredient, right? Typically that buyer, that food service, that chef, for example, they're gonna want a lower cost product. They're gonna add up their pennies and go, can I put this,
into my tea? Can I put this into my dish? And does it make sense? You know, can I sell it at the margin that I need to? So I think that that what you're saying, Rachel goes to put the numbers down and see what makes sense. And because it could be that you're I'm thinking of like, you know, we food service, we would buy things in like five gallon buckets, right? It could be that that five gallon bucket
some reason is more expensive or you need a special seal or maybe there's something hidden in the packaging that would make the pricing need to be different. I would also be curious and we don't have to dive into it, Rachel, but I'd be curious what the margin difference is and if you would still be above that sort of target 50%, that 51%, if you could sell a little bit lower, still get a really good margin and have it be ineffective.
sales channel for you.
That's the work we're gonna do in tomorrow's office hours. Because I have, what's interesting is like Webster on store, okay.com Clark Foods, right? They sell on their website to food service. So I would provide them, they would buy from me in bulk so that they can put a quote unquote retail price point on their website, but they're selling to wholesale.
Perfect.
So that's actually more of a distribution relationship than a food service relationship in a way, right? Because you're selling a food service product, but that's food service distribution. So you have the distributor, the middleman, right? Then you have the second middleman, would be the food service company, and then they're selling it.
And that's like, what's the word that's semantics, right? But it's important because there are some food service relationships where you can sell direct and that's gonna have a higher margin, right? And then there are some relationships that are food service where you will sell to a distributor and then that distributor will resell to your end food service consumer. So also thinking through that, right?
hey, are your relationships that you're looking at for food service, are they direct to the food service company or would they be through, I'll just say a middle man? They would be direct to the chef. Right. So that will be a little bit different. So you'll see in theory, you'd see a higher margin to that direct food service than you would to the, what I'll call distributor food service. And I think that this is another like important like thing, right? Is like,
feature.
remembering that the number of people that are touching and then reselling your product between you and that end user, the lower the price point that you have to sell your product at to make it make sense for the person who's finally going to be at the end. And it makes sense, Rachel, why you would say, you know what? This version of food service for me is not the most profitable and it doesn't make sense right now because it's a form of distribution.
Yeah, yeah. Selling directly would make more sense, right?
of them are coming out weird. Like the distribution, that model for sure makes sense why it's not as profitable, but the direct to food service also is not as, it's in that target range in that ballpark, but they are pushed, they still have been communicating to me that it's too expensive for them. So that's the work I want to do, is be like, okay, well, what's my minimum? Like you were saying, what's my minimum?
Okay.
And where does that fall? that still too much for them? And at that point, like, again, is it not my customer? know, like maybe the product I'm making is not supposed to be for the masses, for food service, because it's too like higher end. I don't know.
That or it's for them, but not right now. So a little bit of transparency, if it's okay sharing this, Rachel, is that your business is very young, you're self-manufacturing right now. The other thing we talked about in our first office hours is, is this process as efficient as possible? Do we understand the true cost to produce this product? What are the ways that we can either create efficiency internally or with a co-packer that can bring that cost down?
but keep the product quality the same. And when you get to that point, then the math might work out where you say, okay, now these food service relationships, they make sense. It's making me think back to the episode we did with Major who owns a popcorn company. And a lot of what she talked about was getting these like people reaching out to her saying, you know, I have this opportunity for you. have this opportunity for you. And she was saying, thank you, but not right now.
I'm going to say no to this right now because for right now in the in the version of the company that I own today and run today, this doesn't make sense. But I'm going to hold on to it and I'm going to reach back out to you when it's when at the time Boichik Bagel did the same thing. People wanted her bagels, Emily's bagels in their retail stores from day one. mean, the New York Times writes about you, right? People want your product in the store. But she said we're not
That's not the time and place for that right now. And then sometime later, now she is in retail stores. So I think that's important too. So important. So we got a question from one of our BABOYOTs in our chat here and it says, I currently put rental for commercial kitchen and event fees for markets in cost of goods sold. My reasoning is that these are true costs for me to make my product and sell at in that channel.
It helps me see which markets are profitable. I've been told these should go under operating expenses, but doing so makes the profitability of each channel unclear. Would love to hear your advice, Sarah, and also how other businesses approach this. Thank you. This is a really great question that actually we talked about in a recent office hours, and this comes up a lot. think cost of goods sold, there's a lot of gray area, I'm going to call it, right? And I have sort of...
I'm going to say Ben a little gray about it myself from time to time because I think it's a little bit nuanced, right? When you are looking at your PNL, you're looking at your finances, your bookkeeper, your tax person, a lot of people in the industry are going to say your kitchen rent should not be a cost of goods sold. They're going to say that's an operating expense. They're also going to say your market fees are market fees and that's an operating expense related to doing markets. And so that should be an operating expense.
I'm a little bit more nuanced here. So if it's a market fee, right, that changes based on when you do a market and when you don't, or like many farmers markets, it's based on a percentage of sales that you're gonna give to that market, right, for participating. It's a variable cost that is going to change relative to how much you're selling. I like that.
as a cost of goods sold. for me, that's not a gray area. For me, that's a clear cut. I like market and event fees in cost of goods sold pretty much period. So I have a firm stance on that one. The kitchen rent is a little bit different and where things get nuanced here. And Rachel and I actually talked about this last week. But so where things get nuanced here is
Number one, is it a fixed cost or are you paying by the hour for the kitchen rental? And if the person who asked this question wants to put in the chat, we respect everyone's privacy here. Not everybody wants to pop on and be on video. So if you can pop in the chat, whether it's fixed or based on the hour, that's going to be helpful. But so a lot of people pay an hourly rate for their kitchen, meaning this week we're going to go in and work for
six hours in the kitchen and so we're gonna pay for six hours. Next week we're gonna be in the kitchen for four hours, right? This is a variable cost that will have an impact on the sort of on the cost to produce the product in a way, right? But I like to take it a step further and say, you should be producing the same number of units per hour, no matter if you are renting a kitchen,
by the hour or renting it at a fixed cost. Therefore, that's one of the reasons I like rent to be an operating expense. The other big reason that I like rent to be an operating expense is let's say that you have a flat rent per month, whether you rent by the hour or not. So this person is saying based on the hour, but I have a fixed number of hours per month. So it's more nuanced, right? But this is gonna apply. So when you have...
Let's just say $1,000 a that you are paying for rent. If you factor $1,000 of rent into your cost of goods sold, thinking like, I'm going to break it down to the product level first. I'm going to assume that I'm going to make 1,000 products, 1,000 units a month, right? Then that would be $1 of rent going into each unit cost for a product.
If you make more than a thousand units, that's going to change. If you make less than a thousand units, that's going to change. It's very difficult. The amount of rent that would be calculated into cost of goods sold is wild. It can move around and it's going to be based on how much you produce. That's one other reason I don't like it in COGS and I like it as an operating expense. Cost of goods sold for me are your ingredients.
your packaging, and your labor. And those three things, those core COGS, you have to have so dialed in, and you need to be tracking that as a percentage of revenue and keeping a very close eye on that. The other COGS that are important to track on your PNL as COGS, but not as a part of your cost of goods sold
calculation on the product level are things like shipping, merchant fees. What are some other things? Shipping, merchant fees, those event costs. You're not going to put those into the calculation of the cost to produce your product, but you definitely want to see them on your P &L.
so that you can see, after the cost of physically produce my product, what other costs of selling are there that are impacting my business? Okay, so let's see. She says, I look at it this way. For example, in an eight hour shift, we can produce a hundred units, including setup and cleanup. So I take my eight hour rental and divide by 100 units to get my cogs for each unit for production.
I understand that reasoning, that's extremely common reasoning. The thing is, if you run out of product, if someone is sick, if for whatever reason you make 90 units or 99 units instead of 100, or you make 101 or you make 150, like it's gonna actually change. And so I don't like it. My opinion is I don't like it in the product level cost of goods sold.
And you're also using your kitchen for, in theory, sales across more than one channel.
Right? So when you talk about calculating channel costs, if you're selling at events and you're selling online, it's all coming out of the kitchen. So you would have to sort of divide. I mean, as you're describing it, you're putting it into a unit cost, but I just, I don't like kitchen rental in cost of goods sold. like it as an operating expense.
One of the ways I think about COGS too, I haven't talked about this in a really long time, is I'm to back up a little bit. So when we talk about COGS calculations, what is the cost to produce a product? There's those three core things, right? The ingredients, the packaging, and the labor. Then when you go to sell at an event, right? If you know that 10 % of your sales are going to go to the event fee, you can factor that into your COGS for that event.
right? To understand, okay, I'm going to be given up 10%. Let me be aware of that. And let me see if I need to modify my product cost, my product price, I'm sorry, for this event. Similarly, because I can hear people saying, wait, Sarah, I thought we should include, you know, shipping costs if we're selling on a website, you should, but you're going to start with your core ingredients, packaging, and labor. And then you're going to look at your channel and go, okay, that's my core. And then when I sell on my website,
I've got a merchant fee and I've got shipping costs. So I'm going to factor that in when I look at how do I price my product for online, right? For my website. If you're selling to food service, you're gonna do the same thing. Okay, am I paying for shipping or is the customer paying for shipping on that? So you're gonna look at all the elements, the other cogs that go into getting your product to the customer. And you wanna certainly be aware of those.
and price your product on those things.
Don't include kitchen rent in there. That's my firm thought on that. You can, of course, do whatever you would like, but that's my recommendation. And then again, I'm going to say we're going to move from product cost and cogs and calculating margin for channel there. And we're going to shift our focus to the P &L. You do want to see your core cogs in that.
cost of goods section, so you want to see a line for your ingredients, you want to see a line for any packaging that you have, or maybe a couple if you want to like separate, you know, bags from labels or however you want to do it. You want to see a line for your labor, if I didn't say that already, and then you want to see lines for things like merchant fees. Love to see your event fees there. Your shipping is going to be there, but your kitchen rent is going to stay down and operating expenses. The reason I like to look at gross profit margin and to look at margin when pricing a product
If we think about it, we have revenue, right? And so 100 % of our money comes in, let's just call it $100. Then we have our cost of goods sold. And let's just say our cost of goods sold with those core things and any of the other things we put in cogs is 60 % cogs, let's just say, right? So that's $60 we spent to generate that 100. That means we have 40 % left.
And that 40 % is going to translate into $40. And that means we have $40 available to us to pay for operating expenses. If your business doesn't make sense when you move around the numbers, you need to know that. Because it's going to inform, is my margin correct? And it's, but even more importantly, I think in this case, it's going to inform how many units do I need to sell to make this business make sense?
because you are paying that flat fee for the kitchen rental every single month, regardless of how many units you sell, right? Because it's really, it's tied to production. And I actually want you to see very clearly that kitchen rental down there in operating expenses. And forgive me, because it feels a little harsh, but this is like important.
I want you to see if that gross profit dollar number is not enough to cover that rent and your other operating expenses. The key, there's so many keys to business, right? At the core is we need to understand the cost of our products. We need to price them so that we have a margin that's high enough.
to be cashflow positive, and then we need to sell enough of them to cover all of our operating expenses. And we need to do that as quickly as possible because that's how we make sure that we continue to have enough money to keep the business going. You're a very young business and we've got businesses that are 10 plus years old and they're still like, they're working on the same things because they never addressed them early and you're addressing them early, which is really awesome. And you're really wanting to understand it and dial it in and
So many people have waited until they're in a bad place to kind of go back and look at this. And so I just wanted to say like, good on you for doing it now because it's so important to do it. Rachel is asking, what are hidden cogs from manufacturers, co-packers and 3PLs? You should put these labels on your new tool. That's an interesting idea. So there really shouldn't be any hidden costs.
Right, you should have a very thorough conversation with anybody that you are speaking to, that you're considering working with, lay it all out, get their documentation, do your math, go back. Like I'm thinking of a co-packer, right? They're gonna give you a list of costs and you're gonna say, okay, I'm gonna write this down. So for every unit of product, am I understanding this correctly? This is gonna be my cost per unit. Are there gonna be any additional line items?
on the invoice that I receive and they should come back and say, yes, if you look in your contract, you're going to see a storage, you're going to see shipping, right? They're going to, they should lay that all out for you and you want to have a really firm agreement. Each business, each co-packer, for example, is going to be different. 3PLs I think are tricky because 3PLs have what's called like a pick and pack fee, right? So for every, let's say for every
order. So for those listening who don't know what a 3PL is, your product goes to their warehouse and when you receive an order, typically online, they get it and they're the ones who are going to pick your order, right? All the things that go into it and then ship it to your customer. So there's things and we probably do a whole episode on this but there are things like the original, there's the order fee. So you're going to just pay $250 let's say for every order that they're going to fill.
And it's different based on volume and who you're working with and what your product is and stuff like that. Then you're going to pay like a pick and a pack fee. So let's say you've got three items that are going into that box. They're going to charge you a little bit for each for grabbing each of those three items. They're going to charge you for the box that it goes in. They're going to charge you for the packing that goes into it. Then they're also going to do the FedEx or whatever shipping costs there are. We recently onboarded
I have a client that recently onboarded with the 3PL, I should say. I didn't get a lot of insight into what the costs of this were going to be on the front end. But on the back end, when I tell you that they send not one, not two, but three invoices every month for the services provided for the storage, that's one cost. Then there's for the pick and pack and getting the products ready. And then they also have the FedEx shipping costs.
The hidden fees that are in that second invoice are things like receiving product, moving product from one pallet to another pallet, putting product on a pallet, unwrapping product. There is a fee for every little thing. And so when you're going into a relationship like that, you need to understand what is the process of receiving product? What is the process of storing my product? What are the things that I should be expecting?
And I think the best people to get that information from are other founders who've used 3PLs, right? Look at a sample invoice if they have one. This is where community really comes in handy in saying, what has your experience been with this? But I think 3PLs can be really tricky. There are some straightforward ones out there, and then there are some out there that just, I mean, they charge you for the sheets of paper.
that they put in a box, like if you have craft, know, a piece of craft paper and they need to, right? That's an expense for them. It's probably a massive expense for them, but you're not thinking about that potentially, right? You're not, if you're not asking them, what are the elements that are going to go into my box and what is the cost for each of those elements, you can really underestimate what a relationship like that is going to cost.
feel like I just sat through a business class. I'm back in school. This was a class I learned so much. you get that feeling of like that energized feeling after being challenged, know, like intellectually challenged.
Oh, good. I want to say one final thank you to all of the BABOYOT members who joined us here today for your wonderful questions. We'll see you again next quarter and have an amazing day.
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