Pricing a Catering Job

Coming up with a fair price for a catering job is tough at first. It is important that you put in the time and learn how to get it right so that you can maximize the opportunities available to you.

This article sets out a basic strategy for pricing a catering job as well as a few other points that are worthy of consideration. However, you will eventually want to come up with your own estimating and quoting system.

The Importance of Accurate Pricing

Some caterers think that by pricing low and undercutting market rates they can win clients and establish a solid market share. Pricing too low under market rates to compete is always bad practice. You may win clients this way but you won’t be making much profit for your troubles and you will find it hard to raise prices in the future. Some clients may also perceive your food or service to be low quality.

Try to price your service at market rates or slightly above to give yourself room to lower prices if the client wants to negotiate. While a small discount may be appropriate though you should not give in too much too customers who want to haggle over your price. Be prepared for some clients to tell you the quotes that they have received from other caterers and expect you to beat your competitor's prices.

Customers will shop around so you will be losing jobs if you are quoting prices that are too high and cannot be justified. Pricing above market rates is possible if you have an established brand with a reputation for quality that can command a price premium. Exceptional sales skills also help to close deals at above average prices.

A Catering Business Pricing Method

Firstly, you have to get some information about the event and the expected attendance. Then you can calculate all the costs involved with catering such an event. These costs will include all your food and beverage requirements and the costs associated with acquiring them, preparing them and serving them. Costs could include the workers that you employ, your own time, transport costs and equipment rental.

Most caterers aim to have their food costs below 30% of the total price that they quote. As time goes by and you get more efficient it is possible to go even lower and 20% to 25% is not unheard of.

Next, you have to work out your monthly business expenses. These costs may include rent, vehicle expenses, depreciation on equipment, advertising and marketing costs, insurance and utilities. Once you have worked out this you can then divide this figure by the number of catering jobs that you typically do in a month. You will then come up with an amount for each event that should be put towards your monthly overheads. You may decide to make an additional adjustment to this amount depending on if you are catering for a larger or smaller than average event.

Once you have a figure that represents your total costs for the job you can then add on a reasonable amount of profit. Then you have the total quote that you can put forward to a customer.

Of course, after you have done this a few times and get a feel for pricing you can get an easier system going. One way is to charge per head and simply make adjustments for the number of courses and any expensive ingredients that were required. As you get a better understanding of the market and gain some experience you will find that pricing a catering job also comes down to gut feeling or intuition.

Another factor that can influence pricing is whether you expect to get future business from a client. You might settle for a lower profit if you are to be catering regularly to a corporate client. Arrangements like this usually run smoothly over the long term and present few challenges. However, if you are doing a one-off event for a customer who is not likely to book your service again in the near future then you would expect to make a higher profit on the job.

Once you have finished pricing your catering services for an event you should then stand back and look at the prices that you have come up with before approaching the client. Once you have compared your estimate with the prices that some of your competitors would charge for a similar event you could find that you are a little too cheap or expensive. You may have to change the price a little to be more realistic and this could affect the profit you make on the event.