According to "Introduction to Catering: Ingredients for Success," there are three systems for determining catering prices. With "cost based pricing," caterers determine the costs associated with producing an event, then add a profit margin to determine the total charge. "Client based pricing" focuses on determining the perceived value of the services offered, basing charges on what the client is willing to pay. "Competitive based pricing" relies on competitor's prices.

On the Other: Location as a Factor

According to Joyce Weinberg, the author of "The Everything Guide to Starting and Running a Catering Business," location is one of the most important factors in determining prices. "Caterers located in large urban areas, where the cost of living is higher," Weinberg writes, "will charge more than caterers located in places with a lower cost of living."

Bottom Line

Caterers must choose to fall on the low, middle or high end of the price spectrum. Weinberg advises setting a price that is 10 percent above the average competition in the area. Charging 20 percent above competitors, she claims, "alerts customers that you intend to provide superior service."

Source:

"Introduction to Catering: Ingredients for Success;" Stephen B. Shiring, R. William Jardine, Richard J. Mills; 2000

"The Everything Guide to Starting and Running a Successful Catering Business;" Joyce Weinberg; 2007

Resource:

Catering Magazine - CateringMagazine.com

Entrepreneur.com: Catering

PowerHomeBiz.com: How to Start Your Own Highly Profitable Catering Business