Running a successful catering business relies on a fine balance of one’s expenses and revenue. With food costs always subject to change, it can sometimes feel challenging to stick to a defined budget or plan a menu that is both impressive and cost-effective. In fact, if not carefully tended, you can quickly fall into the swing of merely breaking even—or worse, ending up in the red. Of course, every business wants to profit so you need to be strategic about your cash flow if you want to see your bottom line increase.
Fortunately, having a strong knowledge of market pricing allows you to advocate for your business and ensure that you’re receiving no less than the value you deserve. It does require some time and effort to stay on top of your dollars, but it is well worth the inevitable profit that comes with cutting expenses and maximizing revenue.
Here are three ways pricing knowledge can take your business from good to great and watch your revenue rise above expectations.
You can plan smarter menus.
When you have a grasp on the current market pricing, you’re in a better place to strategically plan your menus to get the most bang from your buck. For a simple example, take seasonal items. We often design meals around seasonal ingredients because they are priced lower than out-of-season foods. However, seasonality isn’t the only factor at play—understanding the ebb and flow of the market’s supply chains will help you to make smart decisions when planning menus for future events.
You can negotiate with vendors.
Strong pricing knowledge can also help you navigate the marketplace with ease, as you’ll be well-informed when making purchasing decisions. You’ll be able to determine whether pricing is fair and, with that knowledge, negotiate with vendors to ensure you’re getting fair value. When you don’t understand the market, you must rely on food suppliers to have your best interests in mind. While most are trustworthy and helpful, it never hurts to educate yourself so you can act as your own advocate.
You can effectively adjust your pricing.
Pricing knowledge doesn’t just help to cut down costs; it can also provide you with the right information to price your services fairly and advantageously. When you underprice your work, you aren’t just losing money—you’re also showing a lack of confidence. Changing your prices without backing it up with research is risky, as you can easily miss the mark and even price yourself out of the market. Tally up your expenses and calculate what you need to earn to make a profit, then confirm that it’s a solid price point in your market. If it’s not, you likely need to revisit your cost-cutting strategies to see where else you can save.
Once you can confidently justify your pricing based on your market knowledge, you’ll be earning more money with limited added effort. You’ll also be well-equipped to maximize your purchasing decisions and find cost-effective deals while shopping the marketplace. Knowledge is power, especially when it has the potential to increase your profit and elevate your business.