Been asked to supply homemade produce to catering company, no idea what to charge

lbr102

As the title says really. I'm dabbling in selling homemade chutneys, jams, pickles, relishes. Haven't got very far so far. I met someone who is starting up a catering business and has asked me to quote/liter.

I have worked out how much it costs me to make/liter - I have no idea how much to mark it up by.

Does anyone have any ideas? Also what price does a liter of ketchup (for example) sell for at a cash and carry or catering suppliers? I asked a friend earlier who works in a gastropub and he quoted off the top of his head but isn't there now so can't check. Any ideas?

Thanks.

Robert_Roberston

Rough rule of thumb is cost + profit margin (20% but you can go higher?) = your selling price.

Obviously you'd add all your costs together then add your 20% and that should then give you a number to produce one jar?

There are a few costs, jars, labels, etc etc. Not sure on premises etc but I'd imagine so as you wouldnt want to eat into your profit?

lbr102

Thanks. I'm quite confused.

I had previously worked it out based on all of that for a per jar sale. The catering company want to buy it per/liter so packaging is slightly different. I have worked out the new cost and added on 20% that seems very low though. However if I was too simply work out the equivalent of if I was to sell a liters worth of jars at the cost I was thinking of initially, that seems very expensive! For e.g. Approx 5 of my jars would be one liter. This would be £15. By comparison it will cost me £2.25 to make a liter.

I'm starting to wonder if I've got my costs wrong somewhere.

lbr102

By the way I haven't included my time in my calculations.

Robert_Roberston

Is there anyone else who does the same sort of thing in the locality (circa 50 miles?) if so try and obtain a price list and call up posing as a customer asking for litres and ask what their price would be.

If it's low - are all costs attributed for in terms of raw materials? Fixed costs? (rent,rates etc) and variable costs (power, water) if you run it from a proper premises for example.

MsHoarder

lbr102 wrote: »

Thanks. I'm quite confused.

I had previously worked it out based on all of that for a per jar sale. The catering company want to buy it per/liter so packaging is slightly different. I have worked out the new cost and added on 20% that seems very low though. However if I was too simply work out the equivalent of if I was to sell a liters worth of jars at the cost I was thinking of initially, that seems very expensive! For e.g. Approx 5 of my jars would be one liter. This would be £15. By comparison it will cost me £2.25 to make a liter.

I'm starting to wonder if I've got my costs wrong somewhere.

Assuming you're going from "posh" jars and lables to a cheaper 1 litre container that makes some sense. Possibly present 2 prices, the basic packaging one and the posh packaging one, and let the client pick (depending on whether their costomers see the packaging).

lbr102

Thank you both. I haven't considered the costs like electric for example. I'm not sure how to calculate it. Re: premises, I am doing this from my kitchen at home (it has been approved by environmental health).

Your right - it is the one litre containers that are probably making the difference. I did mention the jars to him initially and he said that he would be happy to receive it in four litre containers. I have since suggested that one litre might be better depending on quantities he is using in a day. I suppose if I offer him the jar option then it shows the difference and that it isn't really that unreasonable what I'm asking for, perhaps.

What I'm forgetting though is that I'm planning on selling it direct to consumers at £3 a jar. So I guess I have to work out what I would charge a retailer for it in order to get what the cost/jar to the catering business would be I think. Does that make sense?

Thanks for help everyone. It's nice to bounce this off of people.

Robert_Roberston

I run my business from home (nothing major, just office and the like) my accountant advised me to calculate all the rooms in my house and divide by that number (excluding kitchen and bathrooms) you'd include kitchen I imagine but could possibly remove another area?

Add all your bills together (rent/mortgage, utilities, insurance costs and phoneline / internet costs (% of business)) and divide by amount of rooms, that figure you get is for one.

If you're unsure, I'd go see an accountant for the bookeeping side of things.