But in reality, cost-sensitive customers will purchase the powder which is quite a good value at $1.54 for 400 nutritious calories.

Cost-sensitive customers will make their own...

more to cost than the price tag...

It depends how cost sensitive you are. If you have an extra hour a month to mix the ingredients you can mix your own healthier version for half the cost. Definitely a tradeoff worth making for some people.

Buying a large enough quantity of ingredients to save money is going to cost a lot initially. Need to consider that.

That is an important consideration. If you are committed to doing it though, the cost savings are high. So high that unless your opportunity cost is over $100 for the hour of mixing the ingredients it will make sense.