The most important skill to learn when starting your own catering business is knowing how to price a catering event. You can have years of experience and a a book full of satisfied clients, but if the numbers are not right the business will eventually fail. Here are a few things to consider when pricing a catering job.
- Research the market rate in your area. Clients will shop around for the best price. While you don't want to undercut profits you also do not want to walk customers with prices above the going rate. If you have great sales skills or exceptional referrals you can demand a higher price.
- Take detailed notes regarding the event. When you give a client a quote it is bad business to go back later and attempt to receive a higher fee because of something you neglected to include. Sit down with the client and make a detailed contract, making sure everything they want has been put on the itemized contract.
- Find out the head count. Use this number to figure the food and beverage costs. Aim to have the costs of food under 30 percent of the total price. The more efficient you are the lower you would like that costs to drop into the twenty percent range.
- Account for the number of workers. Depending on the expected attendance know how many workers you need for the event and add their pay to the cost.
- Figure what equipment you need for the event. These items like, large pans, fountains, grills must be accounted for in your quote.
- Keep track of transportation costs. The cost to transport yourself and equipment should also be recorded.
- Pay yourself. Never consider yourself free labor. Add your hourly wage for planning, shopping and transportation time.
- Calculate monthly business expenses. Recurring expenses include rent, marketing costs, vehicle expenses, equipment depreciation, insurance and utilities for the catering business. Divide the total monthly expenses by the amount of jobs you do in a month. That figure is how much overhead costs each event runs you. Add it to the cost of the event with minor adjustments depending on event size.
- Find your break even. Total all the expenses together and that is you break-even point. You must charge this amount to make zero dollars on the job. By Knowing your break even you have a guideline for negotiations if you so chose.
- Add your profit to the quote. Now add your profit margin to the job and you have your initial quote.
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