Costs That Determine Price

Proper price cannot be achieved unless caterers themselves understand all the costs that need to go into the price. Much more than the food and labor needs to be considered when creating a fair price for an event, including:

Food cost. Everything that goes into the food production for an event needs to be tallied to create the final price. It is a mistake to take into account the meat but forget the half box of parsley you’re sending. Parsley costs money!

Labor cost. This is usually considered to be the wages of kitchen staff that prepares the menus. These usually are hourly wages.

Operational cost. These usually are the fixed costs of your business or the costs of being in business. Rent, truck payments and other fixed costs tend to get into this section.

Cost of sale. This might be as simple as the commission to a salesperson or advertising. This is a wide-open category. Some caterers place their plastic wrap, fuel and other disposables into this category. If you know that you will need to give gratuities to security guards etc., this is where you can include it.

Delivery. The wages of the delivery staff, gas, maintenance, etc., go into this category.

Set-up cost. Often there are costs in setting up an event that seem to be missing from the price. This could be wages for staff who physically set up the event or charges by a rental dealer for doing the same.

Pre-party cost. Food samplings, parking fees, gas for salespeople going to and from a client’s location, are a few examples of pre-party costs. Some caterers also assign a cost to the production and delivery of the proposal.

Insurance. Some portion of your premium needs to be placed into each and every price you build. Some caterers add a line item to the invoice for insurance coverage. In some cases they are charging 3 percent for insurance coverage on all invoices. The client can eliminate this by giving the caterer a certificate of insurance that makes the caterers the primary beneficiary of the client’s policy.

Degree-of-difficulty penalty. Caterers are learning to add just a little bit for the more difficult kinds of events or for more demanding clients. Tent events are a good example of events for which the caterer should charge a little more.

Extra meals. The client should pay for all extra meals that will be needed to feed the band, DJ, valet parkers, photographer, etc. Often caterers will put into this section only the actual food cost instead of the retail price of the food expected to be consumed.