The short answer
Start with cost-plus pricing to find the lowest price you can accept. Use food cost percentage to keep single dishes in line. Check the result against competitors and package it so customers can choose easily.
The methods, and when to use each
Cost-plus pricing
How it works. Add food, labour, fixed and overhead costs per person, then divide by (1 minus your target margin).
When to use it. Your default for every catering quote. It is the only method that starts from what the event costs you.
Food cost percentage
How it works. Divide the food cost of a dish by a target food cost percentage. A dish costing 5 at a 30% target sells for about 16.67.
When to use it. Quick pricing of single dishes and trays, and spotting dishes whose cost has drifted. It ignores labour, so it can underprice staffed events.
Gross margin pricing
How it works. Choose the margin you want after food cost and test prices until each dish reaches it.
When to use it. Checking a finished menu. It says the same thing as food cost percentage from the other side.
Competitive pricing
How it works. Look at what other caterers in your area charge for a similar service, and position yourself above, level or below.
When to use it. A sanity check after cost-plus. Never as the starting point, because you do not know their costs.
Package pricing
How it works. Sell a set menu at one price per person, sometimes in tiers such as a basic, standard and premium buffet.
When to use it. When customers struggle to choose. Packages are easier to buy and easier to cost, because you control the menu.
Value-based pricing
How it works. Price on what the event is worth to the client, such as a wedding or a launch, not only on what it costs you.
When to use it. For high-touch events where your experience and reliability are what the client is paying for. Still check cost-plus as the floor.
What is the formula for catering pricing?
Cost-plus
Minimum price per person = total cost per person / (1 minus target margin)
Total cost per person = food + labour + fixed costs + share of overheads, all divided by the guest count.
A common mistake is to add the margin on top: cost x 1.3 gives a 23% margin, not 30%. Dividing by 0.7 gives the 30% you meant. Our pricing guide has a full worked example.
What about the 60/40 rule?
You will see rules of thumb like this quoted for restaurants. They are not standards, and nobody agrees on what they mean. A catering business has different costs from a restaurant: no dining room, but travel, setup and staff by the event. Price from your own numbers.
Making the price easy to buy
Whatever method you use, the customer only sees the result. Package pricing and clear per-person prices make that result easy to accept. CaterWay turns your menu into an online calculator where customers build their order and see the price before they ask. You can also set quantity discounts on single products.
Sources
Checked October 2026.
- Menu Pricing: How to Price a Restaurant Menu, Johnson & Wales University · food cost percentage, gross margin and competitive pricing methods, and the 5 at 30% example
