Pricing Secrets That Will Have You Spending Less and Earning More

With the year that we’ve had thus far, every business owner is seeking solutions to balance their books and cut their expenses. Although we don’t know how long the pandemic will impact the industry, the one thing we know is that those who spend less and earn more will be in the best position to sustain their businesses through to the other side. Our profit margins are always a top consideration, but especially in this period where we’re making up for lost time.

With a bit of creativity and forethought, you can restructure your processes in order to reduce your cost of goods while continuing to serve your clients with a top-tier experience that brings in the revenue. Here are a few strategies to implement if you’re looking to increase your profit margins. 

Limit food waste

Throwing away food that you’ve purchased is like tossing money out the window. It’s one of the biggest areas of profit loss for caterers, with food waste accounting for as much as eight percent of food costs. 

Instead of tossing out those not-so-pretty scraps or letting leftover produce wilt and spoil, find ways to utilize all parts of your ingredients. For example, if you’re making a soup that utilizes carrots, save those leafy tops for a rich pesto or spicy chimichurri. The more you can make out of what you purchase, the less profit you’ll lose to wasteful habits.

Go basic with bases

There are some ingredients that are easy to detect if they’re premium quality (think steak or seafood), but others are nearly indiscernible when used as the base of a dish. Consider going store-bought for the some of the smaller players on the menu, like broths, stocks, spices, and grains.

Then, you can allot more of your budget to the main stars of the dishes and source organic and/or locally-farmed ingredients that might cost a bit more, but will surely enhance the client experience as society embraces “clean eating” and food transparency.

Adjust your pricing

Of course, all of the savvy cost-cutting techniques are for nothing if you simply aren’t charging enough for your services. If your business is always scraping by and breaking even (or worse, ending up in the red), it’s a good sign that you need to increase your pricing for your budget to make sense. This is especially critical now, as the pandemic has impacted supply lines and, as a result, we’re seeing our cost of goods increase as well.

Pair that with the fact that we have a backlog of missed events and it’s likely your pricing structure is in need of a revamp. For the sake of client satisfaction, it’s best to stay true to your agreed-upon rates with existing clients but increasing the pricing for all newly-booked events. 

Revisit your menu planning strategy

We live in an age of food accessibility, in which we can get any ingredient we want at any time of year. Fresh coconuts in the Midwest? No problem. Watermelon salad at a holiday party? Interesting choice, but certainly doable. We have every type of food at our fingertips, but the trade-off is the price we pay for logistical expenses like transportation and storage.

Creating menus around seasonal ingredients allows you to work with local food vendors, eliminating all of the overhead costs attached to international sourcing. It can also benefit you to have strong relationships with regional suppliers, as you can stay in the loop about inventory changes and upcoming sales.

Landing on the ideal profit margin is a bit of an experimental process, so don’t be afraid to try new things and evaluate them for effectiveness. Take out anything that doesn’t bring the savings expected until you’re left with only the smartest and most successful strategies to cushion your budget and create a sustainable foundation for the future of your business.