When I first referred to caterchef's pricing system, I think I was pretty clear that I didn't (and don't) think there is anything novel or original about it. That post was a little too blunt and personal, so I wrote a follow up and talked a little bit about pricing, bookkeeping and artifical person business formats.
I never suggested "corporate pricing."
A corporation or other artificial business form is highly desirable for anyone who wants make a living running his or her own business. For one thing, it allows an onwer to protect personal property from lawsuits against the business. For another, it creates a highly advantageous tax position. And for yet another, it allows long term planning in terms of retirement benefits, group purchase price of insurance, and so on.
If you actually make money as a sole prop or other form of "mom and pop," and you're not thinking of incorporation, a limited liability partnership or some other business form -- you're either nuts, and/or working off the books and trying to cheat the IRS or some other creditor(s). Most likely both. It's not so much the taxes and opportunity to plan -- which should be enough on their own -- it's the liability.
Now if you're more of a private chef who only working small gigs out of the clients' kitchens than an event caterer, liability it's a different story. But even then, why take the risk?
The last thing you want is some SOB asking you, in court, "How do you explain to the jury that it's not fair for them conclude you were as sloppy about making food as you were about planning?" Those questions do get asked, and pretty much just like that. Trust me.
Getting back to pricing, everyone has to take the same things into account and figure out how to charge the customer for them. There's nothing novel about caterchef's pricing scheme. From purely business and tax standpoints, I can think of better ways to do it -- but they aren't better enough to make a big deal about it. Anyway, his charging scheme seems to be a form marketing: Honest Caterchef's Catering Company." So if it works for him, cool beans.
When I was still catering I used a variation of "cost plus," pricing -- which is typical of the high end. I'd adjust the amount of "plus" if costs were either very high or very high or low or the event were much larger than the "intimate catering" my company Predominantly French usually did. Naturally, the customer was informed as to the price structure along with the first estimate; and informed again with the adjusted final bill, if there was one. Also, I furnished receipts if requested (once only, for a hugely expensive wedding I got roped into doing).
I think caterchef was reacting to a pricing schema that you don't see much anymore outside of a few restaurants, low end, limited menu catering, or the kind of catering companies that do HUGE events for a fairly static client list -- where it all averages out eventually.
There's too much competition for very many people to figure the total as a straight product of food costs times a constant multiplier. For instance, "My bill is three times food costs, no matter what" really won't work outside of turkey-roll and lasagna catering or your doing twenty events a year for that client.
You only have to go online to caterer's websites to look at how menu prices see that nearly all caterers are aware that other costs don't necessarily vary with the raw food prices and set p/p accordingly.
Just my $400/hour worth
Edited by boar_d_laze - 7/24/10 at 4:01pm