Wednesday, May 2, 2012

Thoughts On Pricing


Proper price is achieved when buyers feel they are getting a fair price and the caterer is getting a correct amount of profit. The price of the catering is not as crucial as the profit received. Few caterers overcharge clients, but many worry far too much about losing bookings because they have higher prices than their competitors.
Most business people in other industries have no problem with charging what the market will bear. Caterers, on the other hand, seem always to want to be fair with their prices. What they sometimes forget is that fair should mean a win-win situation. A caterer can’t win just by making a sale, especially if the price for that sale is lower than it could be—or should be. Fair pricing means the client has an outstanding event, the guests become future clients of the caterer, and the caterer prospers!
If caterers use only what is taught in the foodservice schools, such as cost times three, as their main mark-up guide for every event, they will never prosper and may even end up in debt. Caterers need to use a mark-up beginning at four times cost and hopefully five and six times for certain difficult catering situations. There are always exceptions to this concept.
Caterers cannot establish a proper pricing policy if they charge every buyer the same price for the same things. No two events are the same, even if the menus are the same. Some events are just harder. Some clients are more demanding than others. When an event is going to be harder and the host more demanding, the price needs to increase to cover the additional costs that will be associated with it.


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