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How can I price the food I sell to make a nice profit, but not be too expensive for consumers?

I have a catering business. I sell subs, salads, wings & fries for my lunch crowd.

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Price is a matter of perception. The price has to be congruent with your "value offer" (what Helen White described, service, limitations, offer, etc.). People pay for a product/service based on what they obtain. You shouldn't offer a very low price as well because it can be interpreted as low-quality, or create a low expectation.

1. You need to focus, first and foremost. What is the niche market? Are you targeting specific events? Where is this kind of food normally eaten and at what time? It is very different to price a school banquet than to price a lunch meeting in corporate offices. Segment your market, understand your competition (in each one), not only direct competition but indirect competition (your service can be compared vs. ordering 40 pizzas from XYZ, for the right price you offer a hassle free product).

2. Once you know your target markets, behavior & psychographic profile, define your service/product for each market you chose and compare you offer vs. the potential competition.

3. Calculate an average cost per service and a minimum price. What is the lowest price that will cover your costs and yield the minimum profit you are willing to work for? Be careful, this cannot be the final price, but it is the floor... you need to know this number so that you can quickly discard any potential customers wanting a lower price.

4. Setup a customer satisfaction survey/report so that you get immediate feedback from your customers once they've tried your service. You can quickly fix (for next events) things that your customers point out, this will help you to keep your customers engaged and generate brand recognition.

Wish you success in your business.


See what others in your area are doing as far as pricing. This will give you an idea what people in your area are already paying. This will also be a way for you to see what the completion offer in both their menu and the service they provide. Do they deliver and set up? Or can this be an added service. What about clean up? Again this could be an added service. Do you need to provide the plates, cups utensils etc. Is there a minimum order amount? I live in upstate NY and I know that most of our caters have minimums. Will you need to add in the deliver expenses as a flat fee. Gas, personnel and any other cost must be included. Even Moe's has catering here that runs about $13 a person and they do well. Used it last year for a sons birthday who just loves his tex mex.

Best of luck in your business.


The foregoing responses to you questions are all very good. I would add the following as a general rule of thumb used in the food industry: one third of sales price is actual cost of product; one third of price for overhead and additional expenses; and one third as profit. This formula will be mitigated by all the competitive factors which the other experts have already commented on.


Through optimizing your expenses.

Check source of your raw material supplies. Since you are already into this business you have power to get best bargain on your supplies, secondly control overheads. If you compensate on quality you will lose business.


Apparently you are now in business.
I suggest that you use the prime cost wizard as a starting point (Your labor, and COGS should not be above 60% of sales).
If your value is on target, the pricing will not be an issue. Understand your competition: who are they, what are their strengths, and weaknesses?
Feature you most profitable items, and add a few at a higher price to protect your core items. It is not the rate of sales of you slow items, but the reason that they are on your menu that count.
At the end of the day, if you can't price your product at profitable level, you have to look inward/at your controls to solve your issues.

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