Hi and I do apologize for the long delay in providing an answer to your question -- the military has been quite challenging these days with long hours and many tasks. Nonetheless, I hope the following answer is quite helpful to you:
Pricing for Profit: To operate a profitable catering business, you need to decide on a price that is appropriate for the services rendered. Determining the costs of catering an event is the most important part of covering your expenses and earning profits. Caterers price their services using different methods. The pricing formula that covers your costs and provides a profit is as follows:
Materials + Overhead + Labor + Profit = PriceMaterials include the costs of the food or beverage items. Also, include any shipping and handling costs incurred to acquire these materials.
Overhead costs are the variable and fixed expenses that must be covered to stay in business. Variable costs are those expenses that fluctuate including vehicle expenses, rental expenses, utility bills and supplies. Fixed costs include the purchase of equipment, service ware, marketing and advertising, and insurance. After overhead costs are determined, the total overhead costs are divided among the total number of catering jobs expected.
Labor costs include the costs of food preparation and service. Also included are Social Security taxes (FICA), vacation time, retirement and other benefits such as health or life insurance. To determine labor costs per hour, keep a time log. When placing a value on your time, consider the following: 1) Your skill and reputation; 2) wages paid by employers for similar skills and 3) where you live. Other pricing factors include image, inflation, supply and demand, and competition.
Profit is a desired percentage added to your total costs. You will need to determine the percentage of profit added to each menu item or type of event.
Determining a price is not easy. It is as much an "art" as it is a "science." There is no one exact price. Base your price on the type of event being catered, special services offered and your competition. When considering your competition, your three pricing choices are to: 1) Charge the same as your competition; 2) charge more than your competition or 3) charge less than your competition. It is important to cover all your costs if you want to stay in business. There are computer programs available to help you price foods and keep financial data for decision-making.
Source: http://www.ext.vt.edu/pubs/homebus/354-305/354-305.html
