Pricing Power: You Got This

Courtesy of Wally S., Wally’s Market Garden, Pleasantdale SK

A few years ago, we added a new question to our business plan review sessions: Do you have pricing power?

Pricing has always been an important part of our training, and I always emphasize that SPIN farmers should never take it as fixed. Fixed pricing is more common to larger scales of production. As a farmer selling directly to the public, you have the ability to vary your pricing according to what’s available or scarce at market, the volume of your production, and your needs.

This point is especially relevant now, with food supplies uncertain and unpredictable due to the pandemic. Play off availability, and if something is scarce at market adjust your prices to what you think the market will bear. Expect complaints. You’ll never please everybody and shouldn’t try to. The old rule of thumb still applies: 80% of your business will come from 20% of your customers. If 20% of potential customers don’t pass you by complaining your prices are too high, you aren’t charging enough. The exact percentages above aren’t important, but the points are:

– you need to capture whatever percent of the market that is willing to pay you what your produce is worth, not the largest percent of the market

— you need to charge pricing that makes being in business worth your while, and hold to it (of course you have to back it up with quality products)

Dynamic pricing is something Amazon and other big online merchants have capitalized on for quite a while now, and consumers accept it. So we shouldn’t hesitate to borrow from their playbook. Especially since more of us are throwing up our own online stores and are doing delivery. Your online prices don’t necessarily have to match up with what you sell at market. Start high and gauge your sales. You can always change them!

RELATED POSTS:

SPIN Pricing 101

What’s Your Pricing Power? Just Ask. 

LEARN HOW TO PRICE, MARKET AND OPERATE A MONEYMAKING FARM BUSINESS IN THE SPIN ONLINE SUPPORT GROUP. FREE TRIAL MEMBERSHIP WHEN YOU PURCHASE ANY SPIN GUIDE.