The right price for your product

The right price for your product determines the existence of your food truck or food trailer. Customers are willing to spend more if they think it is worth it. There is no general formula for the right price and you have to look at different costs. In this article, you will learn how to find a price that is not only right for your customers, but also for you.

What costs do you need to cover?

To determine the right price, you should first know your expenses. For a better overview you can divide them into the following categories:

• Cost of goods
  • These include all the materials you need to prepare your dish or make your product.
• Overheads
  • These include ancillary costs such as electricity, delivery and transport costs or stand rental. But also inconspicuous cost items such as insurance or marketing expenses for flyers, menus etc. are included.
• Personnel costs
  • This item includes all amounts that you invest in your employees. This includes wages, social security, but also work clothes and materials. If you do not have any employees, you can still include your own personnel costs.

Where is your price limit?

Once you have an overview of your cost situation, you can convert it to the production of a dish. For example, you can now determine how high your fixed costs are for the production of a curry sausage with fries. In this concrete example it could look like this:

1. 1. 1. Material costs   = 1,90 €
      2. Overhead costs   = 0,80 €
      3. Personnel costs = 0,60 €

This results in 3.30 € production costs for a Currywurst. This amount defines your price limit. To make a profit, you should never go below this limit, unless it is a special promotion or something similar. In the next step you can add a mark-up, which defines your profit.

Know your customers

As already mentioned, customers have become much more price-sensitive and willing to spend more on street food. To make your food truck business profitable, it is important to know your customers. Of course, this also depends on your location. In the city centre, people are generally more open to spending more money than in other parts of the city. Try to estimate what price segment your potential customers are in and whether they are willing to spend more money on your goods.

Develop your price

We now know your price limit and your customers. In our example, we have a price limit of 3,30 € and assume that our customers are in the middle price segment. Therefore, we add a surcharge of 30% to our price limit. This gives us our sales price of €4.29. This is initially the net price, so the sales taxes still have to be added. In our case, it is a snack bar without seating, so taxes of 7 % apply. We therefore arrive at a sales price of €4.59. To make the price look a little better, we change it to 4.90 €.

The price must fit your concept

Although your customers always want the lowest price, they are also willing to spend more if they are convinced of the quality. There is no magic formula for the ideal price, but you should always know your price limit and your customers. Above all, the price has to fit into your concept. If you open a food truck business in the premium segment, your prices should be accordingly. Only you know your product and what’s behind it, so if your product seems underpriced, you can increase your selling price. However, always consider whether your customers would be willing to spend this amount.