How to price menu
Don’t make losses. Don’t aim for big margins.
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.