How a caterer views the concept of pricing has a lot to do with the success of the caterer’s business. Selling price is the amount of money that a caterer can get from a willing buyer in exchange for catering. In other words, selling price is the amount that someone is prepared to pay for the catering.
Often, when deciding what to charge, a caterer thinks only of what they can get by with. Something like: “What price can I place on my catering that will insure the least chance that I’ll miss the sale?” Most buyers of catering tell us only when they think we are asking too much for our hard work, not when they think we’re charging too little. Imagine a buyer saying, “I’ll take the chicken menu but I want you to charge me $2 per person more because your price is too low.” What a wonderful day that would be! Until then, the only thing a caterer can do is to keep reaching for the highest selling price they can get without losing the sale.
The selling price is the right price that enables you to sell your goods and yields an acceptable profit, at the same time giving the customer the feeling of getting value for their money. Pricing to get the right selling price is a combination of both art and science. You need to constantly measure your price by balancing it with profitability, goodwill and repeat business.
When moving towards the right selling price, consider:
· What is the buyer willing to pay for your catering?
· What is the buyer expecting to pay for your catering?
· How do your competitors price their catering?
· Is the date of the event or delivery on a prime day or a soft one?
· How much does this particular buyer want to use your company?
· The complexity of the catering situation.
· Your need for volume over profit or profit over volume.
· The level of quality the buyer is searching for.
Then there are your costs in producing the catering. Each caterer’s costs are particular to themselves; it doesn’t cost the same for each caterer to create the same menu. A buyer is likely to get both higher and lower priced bids from different caterers for the same specs.
Your catering company does things in a unique way. You have your own methods of preparation and kitchen staffing. You pay your preparation team by your standards. This results in a set of costs that are unique to you and perhaps quite different from your competitors. Your competitor just might be able to produce the same level of quality for less because his or her costs are different. In order to neutralize these possible price variances, you need to present the buyer with a set of options that helps them realize that the price of catering is not set solely by the cost of food.
The selling price is the amount a buyer will pay for the whole idea of catering, not just the food. It includes the caterer’s level of culinary skills, the amount of the company’s liability insurance, the expertise of the serving staff, the level of safety in transporting the food, the cleanliness and sharpness of the banquet facility, the quality of the air conditioning, professionalism etc. Never defend the selling price. Explain it to the buyer before they encounter lower prices from a competitor. Each caterer needs to be in constant search of the correct selling price of their catering.
