Event agencies often charge 10-25% commission on your catering price. This means your margin can shrink significantly if you don't calculate it properly. In this article you'll learn exactly how to calculate your actual profit margin after deducting the agency commission.
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 crucial.
⚠️ 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 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%)
💡 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
Always calculate your break-even point per person after commission. Then you know exactly how much you need to charge to avoid losses, even with last-minute changes in guest numbers.
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?
Yes, the agency commission is subject to 21% VAT. The agency invoices you including VAT, and you can reclaim this VAT as a business owner.
Can I pass the commission on to the client?
Usually not directly. You can increase your quote to compensate for the commission, but it needs to stay competitive. Test what the market will accept.
When is working with an agency not profitable?
If your margin drops below 25% after commission, or if you're paying more in commission than you're making in profit. Then it's better to find clients directly.
How do I negotiate the commission percentage?
Offer exclusivity, volume agreements, or quick payment in exchange for lower commission. Agencies value reliable partners and are often willing to negotiate.
Should I ask for upfront payment on agency jobs?
Yes, ask for at least 50% upfront. You often have to pre-finance while the agency pays after completion. This protects your cash flow and limits your risks.
📚 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
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (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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