This document discusses different pricing methods for menus, including subjective and objective approaches. Subjective methods are based on assumptions and experience rather than cost analysis, including the reasonable price method of setting an estimated reasonable price, the highest price method of setting the highest price from a panel, and the loss leader method of pricing some items very low to attract customers. The intuitive method relies on trial and error based on hunches. Objective methods are based on approved budgets and translating them into prices, using cost data from standard recipes and markups. These include simple markup, ingredient markup, prime ingredient markup, and contribution margin pricing.

1. MENU
PRICING

2. PRICING METHODS
Subjective
Pricing
Objective
Pricing

3. SUBJECTIVE PRICING METHODS
Largely based on
assumptions.
Based on results of
other establishments.
Based on personal
experience.
Common in the food
service industry.
Usually done by people
who have very little
knowledge of product
cost or profit
requirements.
Unfamiliarity with
objective methods.
Ineffective method of
handling pricing.

4. SUBJECTIVE PRICING METHODS
The reasonable price method.
The highest price method.
The loss leader price method.
The Intuitive price method.

5. THE REASONABLE PRICE METHOD
An estimated value/ Price of the
dish set by the manager of the
establishment which he feels is
reasonable.
This price is based on feeling and
sentiment rather than an analysis
of the content.
However, in many cases the price
is right because it has been
thought from the guest's
perspective.

6. THE HIGHEST PRICE METHOD
Usually, the manager
appoints a panel of
colleagues.
Confers with the panel and
includes his own opinion.
Sets the highest price as
concluded by all.
A margin of error is also set
in, so all contingencies are
taken into consideration.

7. THE LOSS LEADER METHOD
THE PRICE IS BASED ON A
SALES PRINCIPLE OF
PROMOTION OF (RIS)
RAPID INCREASE OF SALE.
AN UNUSUALLY LOW PRICE
IS SET FOR AN ITEM OR
ITEMS.
THE MANAGER ASSUMES
THAT THE LOW PRICE WILL
ATTRACT CUSTOMERS AND
WILL ALSO BUY OTHER
ITEMS.
THE METHOD IS ALSO
INTERPRETED AS SCHEMES.

8. THE INTUITIVE PRICE
METHOD
The method is based
on guesswork and
trail and error rather
than a calculated
approach.
The method is based
on a pricing plan
and if one does not
work the other plan
is tried.
The method grossly
differs from others
because it is based
on Hunches and
guess work.

9. OBJECTIVE PRICING METHODS
They are based on approved operating
budgets.
Transferring and interpreting budget
plans into selling prices.
Mainly based on 3 cost
procedures:
Creating updated Standard Recipes.
Pre-costing with current costs.
Using standard recipes despite changes
in staff and curtail deviation.

10. OBJECTIVE PRICING METHODS
Simple Mark-
up(Multiplier)
pricing methods.
Ingredient mark-
up method.
Prime ingredient
mark-up
method.
Mark up with
accompaniment
cost.
Contribution
Margin pricing
method.
Ratio Pricing
method.
Simple prime
cost method.
Specific prime
cost method.