4 Strategies for Smart Pricing on Food Prepped

Strategising a pricing formula in the food and beverage industry can be as nuanced as the flavours in a gourmet dish. Dive into how astute Food Prepped shop owners craft pricing strategies that satisfy both the palate and the bottom line.

From the moment you start your Food Prepped journey, balancing the books with the joy of serving delectable experiences is vital. A Food Prepped shop thrives when it profits, which in turn allows for the creation and delivery of high-quality food and beverages. Remember, the joy of culinary creation is vital, but it won’t cover expenses. Setting profitable prices is key to avoiding the burnout that can dim the passion that inspired you to begin.

Harnessing your passion to add value to your Food Prepped shop requires strategy. No sprinkle of seasoning automatically sets the perfect price. It’s a personalised process to match your offerings with the right numbers. This involves considering not only the cost of ingredients but also market trends, your culinary expertise, business goals, and the unique selling points of your products. Sharing their pricing epiphanies, Food Prepped sellers shed light on creative ways to overcome the common challenge of setting the right price.

1. Understand the Worth of Your Offerings

In the food and beverage market, exclusivity and quality give you an advantage. Your prices should reflect the unique value, taste, and service you provide. Just as a dish’s flavour is enhanced by its ingredients, the pricing should encompass the care, time, and expertise that go into its preparation.

2. Recognise Your Customer Base

What’s affordable for you might differ greatly from your customers’ budgets. One Food Prepped seller realised they were underpricing their gourmet selections by not considering the varying financial abilities of their customer base. Adjusting their prices to reflect the true value of their offerings led to increased profits without losing clientele.

3. Separate Emotion from Business

Pricing something you’ve created can be emotional. One seller overcame this by relying on a pricing formula that took the emotion out of the equation, ensuring their prices covered costs and contributed to business growth.

4. Prepare for Wholesale Opportunities

Considering wholesale is crucial if you want to expand. Make sure your retail prices allow for a profitable wholesale margin. This means setting prices that enable both you and potential resellers to thrive.

Calculating the Core Components:

Here’s a step-by-step breakdown of a pricing strategy for your Food Prepped items:

Wholesale Pricing Formula:

Multiply the sum of your hourly overhead, production costs, and desired profit by 2.

Retail Pricing Formula:

Multiply the sum of your hourly overhead, production costs, and desired profit by 4.

1. Hourly Overhead:

Calculate your hourly overhead by dividing your total business expenses from the past year by the total hours you plan to work in a year. For example, if you work an average of 14 hours a week, that’s roughly 728 hours in a year.

2. Production Costs:

Determine your production costs by adding your hourly wage (the amount you pay yourself per hour worked) to the cost of materials needed for creating your food or beverage products.

3. Profit Margin:

Decide on a profit margin, which is the extra amount you’ll add to cover business growth. This will be part of your pricing formula and should be included in both wholesale and retail prices.

Prices are an ongoing project that evolves with your Food Prepped shop. Reflect on your pricing strategies often and be open to adjustments. As your shop grows, so will your understanding of the best pricing practices. Be sure to keep your product line strong by introducing new lines and updating/replacing items based on how well they sell. Read 3 Ways to Strengthen Your Product Line for a better understanding.

Editor’s Note: To delve deeper into pricing, look out for our next article in the Seller Handbook, offering detailed pricing formulas and advice.

Share your pricing strategies or lessons learned in the comments to help fellow Food Prepped entrepreneurs.