Get Creative With Pricing

It doesn’t always make sense to use the same pricing for every client; look at what will work best for the client—and for you.

In my business of 23 years, we are recognizing the importance of how we price our products. catersource founder and president Michael Roman has been preaching—oops, I mean teaching—different pricing strategies for years. I think some of those teachings are finally starting to produce recognizable sales results for us.

Some tactics that have worked well lately are:

• Increase or reduce the service charge amount. I routinely massage this number in my quotes to meet budgets, anywhere from 5 percent to 20 percent, primarily on food and beverage categories. I even use the service charge approach on self-service or drop-off catering. Many times, the additional services we have sold are the product of the service charge or booking fee. This works well for entertainment, permits, game packages, valet services, parking fees, etc.

• Management fees. Over the past few years, we have sometimes sold food at cost and delivered our services through what I tag on as a “management fee.” This has worked for us with athletic and sporting events, where we may have more than 10,000 participants. Promoters and organizers love the fact that they get to “see” the true cost of the products or equipment being used. By charging a management fee, we sell the services required to execute the event. What we provide is finding the right product for the event at the best price, and may include transportation coordination for donated or sponsor’s product; heating, cooling or refrigeration needs; catering or display equipment; as well as purchasing 35,000 paper cups and 12,000 units of bottled water for one specific client. Many times volunteers, who are overseen by key staff members, are used to help with the event. That reduces labor and overtime costs. Management fees also work well with non-profits and large-scale feedings where budgets are limited. Remember: When the customer pays directly for the cost of the goods, the food cost has been eliminated.

• Rebates from foodservice providers. In some circumstances, I have negotiated with the major foodservice provider for a 10 percent rebate at the back end of the project, adding even more dollars to the bottom line.

No longer is the cost of goods, multiplied by three or four, or per-person pricing, the best way to sell to all of our clients.

Get creative and start selling with a new twist for projects that don’t fit into your normal operation. The results can bring new revenues to your company!

by Steve DeAngelo
Catersource magazine
March/April 2006
Steve DeAngelo is the owner and president of DeAngelo’s Catering, a 23-year-old catering and event-planning firm located in Tigard, OR.