MARKETING FOOD ONLINE



How to Price Food to Sell Online

Posted by Damian Roberti on

How To Price Food To Sell Online

Since sales are your restaurant's primary source of revenue, pricing food becomes the driving force behind its success.

 

Food pricing has a direct effect on your ability to finance key aspects of your market, such as kitchen utensils, services, labor, utilities, and ingredients. Therefore, it’s important to efficiently price your food for maximum profits while designing or upgrading your menu.

 

In this article, we will be showing you how you can price the food you sell online.

Things To Do Before Calculating the Price

  1. Understand you Target market. For this, you'll need to figure out how much customers are willing to pay as well as what the competitors are charging.Simply matching a price is dangerous; you must ensure that all your costs, including transportation, are covered
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  1. Since your expenses, buyers, and rivals are all subject to change, you'll need to adjust your prices to keep up with the demand. Ask around what prices are currently in the market regarding the food you are selling. If you won’t know, you’ll fall back.

 

 

 

 

 

  1. Do not underprice. If you underprice, then when you increase it you’ll lose customers.
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  1. Don’t overprice food either. There are many competitors, if you offer expensive food, people will shift to another seller. Maintain a balance between cost and expenses.
  2. Know your customers so you don’t sell them food they cannot eat. Understand their dietary background e.g., are they lactose intolerant? Are they diabetic? Are they vegan? Etc.

 

 

 

Calculation Of Food Price

The followings are the ways you can calculate food price.

  1. Select Your Preferred Food Cost Percentage: The percentage of sales paid on food is your food expense percentage. In most restaurants, the average food cost ratio is between 25 and 35 percent. Many restaurants strive to reduce their food prices, which would inevitably result in a higher percentage of sales into a profit.
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  1. Determine The Menu Item's Raw Food Cost: Add up the total cost of the ingredients required to produce a meal or dessert for example combining the price of all items required to make sushi (rice, spices, fish, etc.). The cost of raw food is comparable to the cost of products sold (COGS).

 

 

 

 

  1. Determine your price by using the following formula: Apply the following formula: “Price = Raw Food Cost of the dish/ Desired Cost Percentage.” You may adjust the price slightly (round it off) to make your prices appear clearer and are understandable.
  2. Decide your Gross Profit: Gross profit margin is a figure that reflects how much money you make from your sales. A 50 percent gross profit margin on a dish means that the restaurant makes 50 cents on every dollar spent on it. The remaining help you cover the losses (if any), the price of ingredients, and other expenses.
  3. Calculate your Gross Profit: Gross profit helps to determine the overall net profit you’ll have. To calculate gross profit, use the following formula: “Gross Profit – (Labor Cost + Operating Costs) = Net Profit/Loss.”

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