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market-farming - Re: [Market-farming] Pricing produce

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  • From: Willie McKemie <mf AT austinfarm.org>
  • To: Market Farming <market-farming AT lists.ibiblio.org>
  • Subject: Re: [Market-farming] Pricing produce
  • Date: Mon, 15 Mar 2004 20:04:56 -0600

On Mon, Mar 15, 2004 at 07:15:54PM -0600, Matt Cheselka wrote:
> On Mon, 15 Mar 2004, Willie McKemie wrote:
>
> > I find that my grocery store customers care little about my price.
> > Most will take my product at whatever price I ask. Yes, the mark-up is
> > near 100%. However, if I price my product too high and my customer is
> > not able to sell to his customers in sufficient volume, then I have a
> > problem with repeat business or order size. My grocery store customers
> > are very straight forward in discussing prices. I may ask them what
> > they think is a reasonable price and I tell them what I think my costs
> > are.
>
> Willie, in your opinion, is it better for your customers to set the price
> (based on whatever criteria they decide, like maybe what they're paying
> other growers), or should *you* set the price and they can essentially
> "take it or leave it"? I'd think that your customers have the buying
> advantage here since if you won't supply the stuff they want, they can
> probably find it elsewhere.

A grower can not allow customers to dictate prices that are below the
cost of production. No matter the competition. If you are worried
that competition is dictating too low prices, you may have the wrong
product. The point I was attempting to make in the snipped section of
my reply is that many new growers may not have a good estimate of their
cost of production.

It is fine for a grower to accept a customer's offer if the grower
believes that it allows a "profit". I set my prices on a "take it or
leave it" basis and those prices represent what I think is something
over my cost of production. If the product is unique and in good
demand, I goose up the price(*). When I set a price, I take into account
the volume I need to sell. I ALWAYS begin a crop with modest volume.
>From season to season, I make adjustments to volume and price depending
on perceived profitability and demand.

This is a long term iterative process. Each season I adjust my
product mix based on demand and perceived profitability. I will grow
more of an item that seemed to be both profitable and in short supply
the previous season. I will abandon or grow less of a product that was
difficult to sell at a perceived profit. I imagine all long term
growers do the same. Small scale farming is a continuing search for
the profitable niches.

(*) I sell both green and purple asparagus, the purple for a higher
price. Retail customers ask what the difference is. I answer "color
and price".

--
Willie, ONWARD! Through the fog!
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