Pricing
Don’t make losses. Don’t aim for big margins.
Idli Iyer prices low, while Hiut Jeans prices high. Both are right in their pricing. Pricing can make or break a business.
As per Balance SMB 6 things matter while pricing the menu.
Gross profit margin: It’s what you have left over after you’ve met all expenses directly related to selling your product (primarily cost of goods and direct labor).
Food cost: Food cost should be in the neighborhood of 25% to 35%. In other words, if you pay $1 for something, you should usually charge a minimum of $2.85.
Eye on the cost equation: How much preparing that dinner is going to cost you to serve, including ingredients and staff costs.
Change pricing: If more ingredients go into the dish, it should reflect in the pricing.
Portion control: Since it’s all about pricing, tight portion control, using weighing scale helps in controlling costs.
Size up the competitors: Customers do not want to pay higher for the same dish.