Understand Your Current Pricing Model
Take a deep dive into your existing pricing structure. Review costs like overheads, labour, and COGs (cost of goods sold). Are some prices basket prices for specific customers? Do you know the exact margin on your top-selling items? Have you recently reviewed the labour time it takes to produce your products? These details are critical to ensure your pricing is accurate and up to date.
Understand Your Customers
Review each customer individually, paying close attention to your margin and the margin they expect, whether they're a retailer or a food service client. Ensure you're aware of the profit each customer is making on your products. Compare similar products sold to different customers and adjust your pricing to reflect these differences.
Build in Contingency
Having a contingency in place is essential to cover potential increases in labour, raw materials, or any unforeseen costs. By planning for these variables in advance, you can maintain profitability even when the unexpected happens.
Account for Waste
Waste is an inevitable part of any production process. Review your waste levels weekly and include an average percentage in your pricing model. By factoring this into your costs, you can avoid unexpected losses and maintain control over your bottom line.
Plan for Promotions
Depending on your products and customer base, retailers may expect you to run promotions. If this applies to your business, ensure you’ve included promotional costs in your pricing strategy to avoid eating into your margin when running discounts or special offers.
By taking a structured approach to pricing, you can safeguard your margin, ensure your costs are covered and remain competitive in the market.