Menu price

Also called: selling price

A menu price has three inputs: the plate cost, the margin the dish has to hold, and what the item is worth in your room. The cost-derived floor is plate cost ÷ (1 − target margin), so a $4.20 plate at a 70% target floors at $14.00. Everything above that floor is judgement.

The starting price

Menu price = Plate cost ÷ (1 − Target margin)

70% target → divide by 0.30. 68% → divide by 0.32.

Worked example · From plate cost to menu

Plate cost: $4.20
Target margin: 70%
Cost-derived price: $14.00
Rounded to menu convention: $14.50
Resulting margin: 71.0%
Menu price: $14.50

The three adjustments

Round to your menu's convention. A menu that runs $14, $18, $24 shouldn't suddenly have a $14.37 on it. Round up to the convention, never down — rounding down is a free discount you'll never notice.
Check it against the room. Cost-derived pricing has no idea what your guests will pay. If the number lands well above comparable dishes nearby, either the dish needs to justify it visibly or the recipe needs work.
Check its neighbours. A price is read relative to the items around it. See price anchoring — the same $29 reads as expensive next to a $19 and reasonable next to a $44.

Run the numbers

Menu price calculator

Open it free →

The guide that works it through

How to Price a Menu Item: Markup vs. Margin

The formula for pricing a dish from plate cost and target margin, the markup/margin confusion that underprices menus, and the three adjustments before a price goes on the menu.

Related terms

← All 63 terms