In a world where housing markets are steadily declining, foreclosures increasing and the uncertainty of who is making an accurate economic forecast, competitive pricing is more important today than ever before.
As unfortunate as it may seem, fair market prices on services, entrée items, alcohol, catering and other ancillary service are not always based on cost of goods or needed profit. Frequently pricing has to be comparable to that of neighboring competition or others who service the same market. It is difficult to be the most expensive business in the marketplace, and almost impossible to be the cheapest.
In a recent email, a caterer with 23 employees wrote abut attempting to standardize and improve service.
The dilemma is whether to charge the same fee for delivering equipment to a 50 person catering event as it is to deliver to 300 person event.
The email brought to mind an incident that taught me a valuable lesson about pricing. Simply, pricing is a science that few restaurant owners study. After a lengthy Christmas Eve of catering to a well known food manufacturing family on
I was the cook and butler, Kranston the maid. I can still see the short black skirt, the white apron and white blouse as she rushed to the dining room door each time the matriarch of the family rang the small crystal serving bell that sat next to the butter plate.
Each of these events should have had an up charge. Seldom are caterers cognoscente of the real amount to charge for service. But, we knew what we were getting into when we agreed to take on the party. And charging for Lamb Meatballs, Mashed Potatoes and Broccoli, the traditional family dinner of this highly traditional family, was hardly an entrée one would place in the creative culinary portfolio.
Although the total sum of the event – now that I look back- was almost billed at a charitable rate, the matriarch had a definitely problem with the 18% service gratuity that was added to the bill. Not only did she reprimand for putting it on the bill, she claimed the only reason she would pay it was that it was Christmas Eve. Needless to say, we opted to not do business with bell ringers in the future – and to this day – seldom use white flour.
The lesson was simple. Instead of placing a service gratuity on the final invoice, we should have worked that into the price of the event. And, I would suggest the same approach to the rental equipment dilemma facing the equipment rental caterer. Many operators have two prices. One for meals prepared and picked up, and, another price for meals delivered.
In the equipment world, it would be easy to charge $2.50 for a chair if picked up and $3.00 if delivered. Adding a minimum deliver number – possibly 50 chairs – would also cover the cost of starting and loading the truck.
We all have to remember we are serving a value to our customers and whether that value is quality food, entertainment, service, atmosphere, or mere cordiality we need to put a fair market value on the product. Otherwise we need to find some more relaxing hobbies.