Here's what most caterers discover too late: that 15% agency commission just turned your healthy 40% margin into barely breaking even. Event agencies typically charge 10-25% commission on your total catering price. You need to calculate your actual profit margin after deducting this commission, or you'll be working for free.
What is an event agency commission?
Event agencies act as intermediaries between you and the client. They charge a percentage of your quote as commission. This can be:
- 10-15% for smaller agencies
- 15-20% for established agencies
- 20-25% for exclusive agencies
This commission comes off your revenue, not your profit. That makes calculating your actual margin absolutely critical.
⚠️ Important:
Always calculate the commission on your total quote amount, including staff and materials. Not just on food costs.
The formula for margin after commission
You calculate your actual margin in three steps:
Step 1: Net revenue = Gross quote - Agency commission
Step 2: Total costs = Food + Staff + Materials + Transport
Step 3: Actual margin % = ((Net revenue - Total costs) / Net revenue) × 100
? Example:
You quote €5,000 for a corporate lunch (50 people). The agency charges 15% commission.
- Gross quote: €5,000
- Agency commission: €5,000 × 15% = €750
- Net revenue: €5,000 - €750 = €4,250
So you actually keep €4,250 from your €5,000 quote.
Cost calculation for catering
For a complete cost calculation, add up all your costs:
- Food costs: Ingredients per person × number of people
- Staff: Chefs and servers on-site
- Materials: Dishes, linens, warming equipment
- Transport: Fuel, time, wear and tear
- Overhead: Insurance, administration (usually 5-10%)
One of the most common blind spots in kitchen management is forgetting to factor transport time into your labor costs. That 2-hour round trip isn't free.
? Complete example:
Corporate lunch for 50 people, quote €5,000, agency commission 15%:
- Net revenue: €5,000 - €750 = €4,250
- Food costs: €18/person × 50 = €900
- Staff: 2 people × 6 hours × €25 = €300
- Materials: €200
- Transport: €150
- Overhead: €200
Total costs: €1,750
Profit: €4,250 - €1,750 = €2,500
Actual margin: (€2,500 / €4,250) × 100 = 58.8%
When does it become unprofitable?
With high commission percentages, your margin can disappear quickly. Watch for these warning signs:
- Margin below 30% after commission
- Commission higher than your profit
- Agency requires upfront payment but you have to pre-finance
⚠️ Important:
With commissions above 20%, you often need to increase your quote by 25-30% to maintain the same margin. Check if you're still competitive at that price.
Alternative agreements with agencies
Sometimes you can negotiate better deals:
- Fixed fee: €X per event instead of a percentage
- Tiered pricing: Lower commission with more events per year
- Exclusivity: Lower commission if you become their preferred caterer
? Fixed fee example:
Agency charges €300 fixed fee instead of 15% commission:
- On €2,000 quote: €300 (15% would be €300)
- On €5,000 quote: €300 (15% would be €750)
- On €10,000 quote: €300 (15% would be €1,500)
The higher your average quote, the more advantageous a fixed fee becomes.
How do you calculate your margin after agency commission? (step by step)
Calculate your net revenue
Subtract the agency commission from your gross quote. With a €5,000 quote and 15% commission, you keep €4,250 net revenue. This is the amount you calculate your margin on.
Add up all your costs
Calculate: food costs + staff + materials + transport + overhead. Don't forget hidden costs like extra travel time or special equipment. Add everything up for your total cost price.
Calculate your actual margin percentage
Use the formula: ((Net revenue - Total costs) / Net revenue) × 100. This gives you your actual margin after deducting the agency commission. Aim for a minimum of 25-30% margin.
✨ Pro tip
Calculate your break-even point within 48 hours of quoting any agency job. You'll know exactly how much you need to charge per person to avoid losses, even with last-minute guest count changes.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Do I have to pay VAT on the agency commission?
Can I pass the commission on to the client?
When is working with an agency not profitable?
How do I negotiate the commission percentage?
Should I ask for upfront payment on agency jobs?
What if the guest count changes after I've agreed to the commission?
Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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