Price for Profits, Market for Sales

Pricing for profits for farmers who market directly to consumers.
Price for Profits, Market for Sales - Articles


About Highland Orchards

Diversity equals success for Dave Hodge, third generation farm businessman from Highland Orchards. Hodge's agricultural enterprises not only include all manner of pick-your-own fruit from strawberries and yellow raspberries to apples and pumpkins, but also numerous agri-tourism angles such as birthday parties, school tours, Easter Bunny Hayrides, a bakery, and a farm store. In addition, Hodge also made the most of having to build a road through his farm, re-using the equipment he had to purchase to launch a road construction and excavation business. These diverse enterprises have endowed Hodge with a wealth of experience and wisdom successful pricing strategies when marketing directly to consumers.

Price for Profits - The Mark-up Pricing Strategy.

Geared towards growers with farm stands, farm markets, pick your own operations or other agri-tourism enterprises, Hodge compared margin and markup pricing methods. Highland Orchards relies on the markup method (mark-up factor * costs=price) to come up with an item's cost, since the mark-up factor's dependence on product characteristics such as average shrinkage, shelf life, et cetera reinforces pricing forethought, as well as frequent re-evaluation of production or acquisition costs. When thinking about production or acquisition costs, be sure to conduct a careful re-evaluation of labor costs - Hodge walked participants through several examples and a discussion of this essential piece of not only your pricing structure, but also your ability to command the prices you need for profitability. Hodge emphasized that to establish profitable pricing; it should be these factors, not average market prices that determine prices.

Market to Justify your Price

So, that's all nice, but how can you charge more than fair market value for your products? According to Hodge, it's all about connecting with your customers - tell them a story and provide an experience. Hodge explained that he doesn't just sell cheese in his store; he sells an investment in family farming with cheese in his store. An Amish family, former neighbors of the Hodge family, who were essential in the early success of Highland Orchards, make the cheese on their new family dairy farm in State College. Hodge's family, grateful for their support so many years ago, now supports them by selling their cheese with the story. Connecting with customers enables profitable pricing that's fair to the farmer and the customer.