Who Sets the Price For Your Farm Products?

Posted by David on October 10, 2011 under Tools to Increase Farm Sales | Be the First to Comment

Who sets the price for your farm products? That’s the question I have been asking myself and others lately. The response has been enlightening. It looks like there are two foundational beliefs among farm producers.

1. Ultimately the consumer decides what they will pay. There isn’t much you can do about supply and demand. People only have so much money and other statements that focus on the customers ability, or willingness, to pay your asking price.

2. I set my prices. I know what I have to have to make a profit and even though it may reduce the amount of potential customers I can market my farm products to, I have to be in control of my prices. People can come up with the money to buy what they really want to buy. There are many factors to consider other than price.

Let me say right up front; what I’m about to share isn’t to be considered as an absolute answer to these questions. I want to challenge your current beliefs about pricing when it comes to your farm products. I hope to cause you to think outside the box and reap bigger profits because of it.

Let’s look at the belief that the customer sets the price or supply and demand etc.

Supply and demand is definitely a factor in producing a product to sell from your farm. If you start out trying to sell something that has little demand or more supply than demand, you are truly destined for a price war with other producers. IF and it’s a big IF, you can’t show consumers why your product isn’t the same as what is offered by other producers it will come down to price.

This is why you see folks going to several grocery stores to buy food at a lower price. You know they just past by the same product at the last store but their perception is the next store has the same product at a lower price.

That’s the strategy behind sales, loss leaders, buy one get one free, or whatever the latest price scheme may be at the local grocery.

If you are selling on price as your main benefit to your product you are probably fighting a losing battle. Somebody will sell it cheaper.

Think about this: If you’re not the best price, then how powerful is to say to a customer “we are the third best price in town.”

When you’re selling food as most farmers are, it’s tough enough trying to position your product as unique. So it’s imperative to move away from price and move towards something else.

This one of several reasons why I don’t sell at farmers markets. You are either the only one offering a certain product or you end up selling on price.

Having the lowest price is completely unsustainable as far as advantage in the market place. Only the poorest of people have their choices controlled by lowest price – and I’m not looking for poor customers.

So if you can’t have cheapest price and you shouldn’t have the cheapest price, AND the second cheapest offers no real advantage to the customer, stop worrying about where you are on some price ladder.

Instead concentrate on creating a marketing system like the one outlined in my latest ebook, The Secrets of Selling Your Farm Products Revealed and delivering an exceptional experience and service to help make price seem almost a non issue.

If you set prices so you can maximize your profits this gives you more money to provide better service and concentrate more money on acquiring customers.

Both of which are crucial to building your farm business.

Next time I’ll take on the statement that I set my prices. I know what I have to have to make a profit and even though it may reduce the amount of potential customers I can market my farm products to, I have to be in control of my prices. People can come up with the money to buy what they really want to buy. There are many factors to consider other than price.

Until next time…