Help me set a fair price for my services!
May 10, 2011 9:57 AM   Subscribe

Help! Yesterday I impulsively put an ad on craigslist offering meal preparation (on-site or delivery) and grocery shopping. But what should I charge?

I'm a trained cook but not a professional chef, and I love to feed people. I'm already a volunteer shopper for seniors. My "real" career is slow right now, and I need more income.

This morning I have 3 seemingly-legitimate people asking me to call them back. The problem? I have NO IDEA what to charge for these services, or how to structure. (Ideally, I'd like to come in once or twice a week and prepare meals for someone, including leaving a few things in the freezer.)

I'm in an affluent U.S. community. I don't want to overcharge but I also don't want to be taken advantage of. Advice? What would YOU pay? Many thanks.

(I'll be looking into licenses, insurance etc soon. I will be declaring the income for tax purposes.)
posted by 2soxy4mypuppet to Work & Money (23 answers total) 7 users marked this as a favorite
Forget what I'd pay. How much would you like to be paid per hour of work? How much work do you think it'll take? How much will the raw materials cost? Are there any equipment costs that need to be factored in? Work all that out, then you'll know how much to charge.
posted by Magnakai at 10:02 AM on May 10, 2011

I think a little chart with some packages would make sense.

Package A - 2 dinners enough to serve 4-6 people. Dinners include main course, 2 sides and dessert.

Package B - dinner party for 6 people (and $XX for additional people). Includes (whatever it includes)

Package C - shopping for items that you won't be preparing (just a surcharge or a percentage of the total bill). You will get the stuff, bring it to their house and put it away.

If you order a month worth of Package A then you get one free or something like that.

Just some ideas. It sounds like it could really be a good business!
posted by dawkins_7 at 10:03 AM on May 10, 2011 [2 favorites]

Raw materials will be charged to the client, and I have all the equipment.

I'm not sure what I'd like to be paid per hour, but what the market will bear is a factor. Thanks for the package idea!
posted by 2soxy4mypuppet at 10:06 AM on May 10, 2011

You have to factor in replacement/repair/upkeep of your equipment.
posted by jerseygirl at 10:15 AM on May 10, 2011

I think you should be careful not to under-price yourself. If you live in an affluent community you might be surprised by how much people will pay for such a service. My boss hates to cook and spends what I consider ridiculous amounts of money for prepared foods without even batting an eye.
posted by FormerMermaid at 10:15 AM on May 10, 2011

If you don't know how much your own time is worth then that's a problem. I would start by figuring that out.

But if you can't do that then a formula like this might get you in the ballpark: ingredients + some fraction (50-100%?) of what the same meal would cost in a restaurant aimed at your target market.

Of course it's much better to err higher than lower when experimenting with prices.
posted by caek at 10:18 AM on May 10, 2011

In Silicon Valley, personal home chefs charge $400-$600 for 3 meals (4 servings/meal) prepared in the client's kitchen and left with reheating instructions.

The Personal Chefs Coop member directory might help you get some ideas: the directory is sorted by state and most of the members have links to their websites where they list plans and pricing.
posted by jamaro at 10:35 AM on May 10, 2011

I work in a restaurant (also in a pretty affluent community) where we have some regular customers who eat out for every meal.

Let's take one couple as an example. Their bill just for food comes to around $35. I have no idea what they drink since I work in the kitchen, but I'm pretty sure I've seen glasses of wine on the table which would probably bring the bill up to around $50. The waiters really like it when they come in and I've never heard them complain about tips, so let's add another 20% to that and say their bill is about $60 a night for each of the at least 3-4 times a week they come in for dinner.

They're prepared to spend $60 on one meal multiple times a week*. I'm assuming they wouldn't want to pay $120 to have the meal twice if they had to heat it up the second time.

Your competition is going to come from restaurants. Why would people go to you when they have a restaurant able to do the same thing?

Initially it seems like a no brainer. They get the food in their home and don't have to make it. But people have their preferred time to eat and a lot of the time that's the same time as other people. In a restaurant kitchen that doesn't really matter. But you're not going to be able to cook steak for me at my place then get over to cortex to roast him a duck unless you're really lucky and we live next door to each other. So for meals prepared at the client's home (or wherever since I guess they can technically get you to cook in an office kitchen too) you have to accept that you might be looking at a situation where you're booking 1 client a meal.

But you say you're in an affluent community. People will pay for this exclusivity of your attention. So that's not really a bad thing.

I'd say the first step is to figure out what you'll be cooking, look around to see what other people are charging for those meals, and work based on that. We charge $15 for a 6-8 oz piece of salmon encrusted with basil, Parmesan, and panko bread crumbs, a good scoop of butternut squash mashed potatoes (of which we use about 1/3 of the 50lb bag of potatoes for every batch), and sauteed zucchini and carrot. Our food cost on that is nowhere near $15.

Another thing to consider is if you'll be dealing with alcohol. One of our wines we get for about $5 a bottle and sell a glass for about $8. Alcohol is a good money maker, but then you have to worry about other licensing issues.

They get the same thing every time too, which I think is crazy. But it does mean they're easier for using above.
posted by theichibun at 10:36 AM on May 10, 2011

For the grocery shopping, could you do a percentage of the bill with a certain minimum. Like 20% of the bill or a $20 minimum charge per trip. Ideally, you'd have 3-4 grocery orders you could pull during one visit, go when it's not busy and have a cashier that knows what you're doing. Have everything sorted into the individual orders in the cart so it's easy and fast to get separate invoices at checkout.

For the cooking - I'd probably expect you to charge per portion or per meal, not by the hour. I'd want to you pitch me that you'd come over Sunday night and stock my fridge with dinners for the entire week (or at least 3 nights). You might also offer to make clever lunches for the kids since that's always a chore and makes me a bit crazy. Ideally, you could get 3-4 families signed up and make everything in bulk at your house. Then you take Sunday to deliver to all your customers and accept payment. If I was paying for the ingredients separately than I might expect to pay someone $50-60 @ week to handle the prep work. I might be willing to pay more if the food was healthy and super delicious.
posted by victoriab at 10:39 AM on May 10, 2011

Some thoughts from hosting a large, food-related event.

I'm hosting a party with an exotic dish as the centerpiece. I blindly made up a price based on what I thought the meal might cost per person, and I got lucky - I'll probably break even.

Know exactly what the meal consists of. Calculate how much the meal itself will cost and tack on a reasonable percentage. For example, the meal I'm serving costs ~$20/person. If I charge 25% more (in this case $5), I make a profit.

Because this really is just a fun thing for me, I did not factor in the cost of my time, maintaining my equipment, or even my mileage. I don't need to count every penny; I'm just experimenting.

For now, worry about doing better than breaking even, and whether this whole thing actually works for you. If you want, let people know that they're getting a reduced rate since you're just starting out.
posted by jander03 at 11:06 AM on May 10, 2011

Your competition is going to come from restaurants.

Not necessarily. People are willing to pay a premium to be served in their own home for multitude of reasons (plus, going out to the restaurant requires time, effort and resources above the final tab).

Cost of food x3, plus your base fee which can be a flat hourly rate.
posted by archivist at 11:11 AM on May 10, 2011

Thanks for all the feedback so far!

My first meeting is with a potential client who uses a wheelchair. He works full-time in a well-paying profession, has a health aide who comes in each evening, and describes himself as "not picky but tired of TV dinners."
posted by 2soxy4mypuppet at 11:31 AM on May 10, 2011

As a point of reference, I use a meal service (Let's Dish) which ships frozen, mostly prepared but uncooked meals to me. It includes the main dish + a side (starch or vegetable). The base cost for 8 meals (which feed 4-5) is $250. They will "split" these meal for free, so I end up with 16 meals that feed two.
posted by kimdog at 11:35 AM on May 10, 2011

What would similar meals cost for takeout? If you prepare high quality pesto, pasta, green salad, and pie, that's probably 35 at a restaurant. And you'll be preparing food to the customer's specifications.

Make sure your kitchen could pass an inspection. Be insanely rigorous about food safety.
posted by theora55 at 11:42 AM on May 10, 2011

I wouldn't prepare anything in your home kitchen, as you'd need inspections, licensing, etc. In California, you need a food handler's permit, too.
Are you buying retail or wholesale? Do you have resale number?

Better to charge for your services, not the actual food. (Of course, the client pays for the ingredients, but there's a difference in tax, reporting, etc.)

Here's a private chef wanted ad from LA.
posted by Ideefixe at 11:52 AM on May 10, 2011

Here's a pricing metric I've heard of.

Increase until they flinch.

This means, you tell them "I can do a for $20, if you want b that's $40, adding c brings you to $60 etc.

A trick I learned managing dental offices: use the word dollars as few times as possible, and when you're talking about thousands, don't say the word thousand.

The word thousand scares the pants off of people. The word hundred can have the same effect in many circumstances. So, if you were going, from 60 to 80, your next step might be "one twenty" rather than "one hundred twenty."

As for what your time is worth, factor in your liability issues - are you buying insurance for this venture? I sure hope so, because if Mrs K gets a belly ache, you're the first person she's going after, even if she's been eating some other food straight out of a dumpster, for fun. Factor your insurance (and whatever local licensing requirements) into your pricing.
posted by bilabial at 12:59 PM on May 10, 2011 [1 favorite]

I use an out of home meal service. Each month there is a new menu of 12 - 16 entrees that feed 6 people. I can choose 6,9 or 12 meals. They have three pricing options. Option 1: I go to their location and assemble the meals myself. Option 2: The prepare and I pick up. Option 3: They prepare and deliver. The pricing starts at $170 for 6 meals + $15 to split meals in half (so 12 meals for 3) + $25 for them to assemble +$25 for delivery. So this would be $235 for 6 different dinners that are packaged for the freezer. These meals do not include sides, they are an additional $6 - $10.

You could consider having a "menu" with lots of room for customization. This would allow you to buy in bulk and increase your profit. If you do everything in the customers home you could use this pricing as a base and perhaps add an hourly wage on top?

The company I use is Supperworks if you want to google them.
posted by saradarlin at 1:39 PM on May 10, 2011

You need to find private chef services in your area, to see what they charge, then scale up or down accordingly (down if you want to undercut them as a competitive feature, up if you offer more services, like household grocery shopping as well as meal prep).

If I were to hire you, I would be googling to see what everyone else is charging for the same thing, so I can compare your prices to theirs.
posted by Joh at 1:54 PM on May 10, 2011

Thanks again for all the suggestions! I've found a number of personal chefs in the area, and their prices all tend to clump together in a pretty narrow range. I'll be charging a base rate that's comparable to the others, plus the cost of groceries, and will throw in grocery shopping as a bonus.

It sounds dork but cooking really is a labour of love for me, so I want no more than 2 clients a week. Seems like a lot of local chef outfits are hiring employees (probably for a low wage) and serving a lot of clients.

Already have a call in to my insurance agent. Not going to bother with the "professional" associations ... a lot of what's online sets off my educational scam radar.
posted by 2soxy4mypuppet at 4:17 PM on May 10, 2011

Price high but not unreasonable, and have a great, professional presentation, and flawless menu. They will either pay what you charge, or they will negotiate down.
posted by blargerz at 5:03 PM on May 10, 2011

You got three potential customers in less than 24 hours. Think of this as a negotiation proces with the universe. Set high prices. If "the market" (these three people) won't bear it, wait for the next batch of people and try a lower price.
posted by telegraph at 6:25 PM on May 10, 2011

There are three basic ways to set prices:

1. Figure out how much time it will take you and the value of your time, then multiply
2. Find out how much others performing the same service charge. (Of lesser importance, others performing a somewhat similar service.)
3. Negotiate with buyers to find out how much they will pay.

FWIW the main problem with number 1 is almost everyone underestimates both the amount of time it will take and the value of their own time.
posted by flug at 6:33 PM on May 10, 2011

Way off-topic, but relevant: are you aware of the applicable food service laws in your state? Running afoul of them could mean serious fines, and the end of your business (since they can forbid you a commercial license).
posted by IAmBroom at 9:53 PM on May 10, 2011

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