Articles

Pricing Agritourism Events and Experiences

Creating pricing strategies for agritourism involves considering costs, experience value, and visitor expectations. This article examines factors affecting pricing decisions, key strategies, and examples of helpful pricing tools.

Save for later Print

Updated:

August 28, 2024

Skip to the end of the images gallery

Image credit: Sarah Cornelisse, Penn State

Skip to the beginning of the images gallery

A national survey of agritourism operations found that more than half (66%) of the farms reported profit under $10,000, and 79% of farms reported challenges with cash flow management and availability of operating capital (Hollas et al., 2021). The survey also found that positive revenue and profitability are most strongly associated with on-farm sales and entertainment experiences (Hollas et al., 2021). For agritourism operations that offer activities and experiences, pricing becomes key to having adequate cash flow, operating capital, and profitability.

Beyond profitability, pricing contributes to the perception of your agritourism operation; that is, when consumers see your prices, they draw conclusions about quality, target audience, experience, and so forth. Consider two farms with a haunted forest experience. If priced differently, consumers with no experience with either may assume that the higher-priced experience is better. It is essential for agritourism operators to align their pricing strategy with their brand positioning, ensuring that prices reflect the quality and value they promise. Operators must understand their target market and gauge what their visitors are willing to pay. Striking a balance between perceived value and actual costs is key, as setting prices too low might undermine the perceived quality, while prices too high could alienate potential customers. By thoughtfully setting your prices for the activities you offer, you can effectively communicate the worth of the experience you offer and remain profitable.

Revenue Generation Opportunities

Depending on the type of agritourism activities and experiences you offer, there are numerous opportunities to generate income. These include:

Admission fee
Activity fee (tour, tasting, craft table, classes, etc.)
Lodging
Facility rental
Food service
Souvenir sales
Sales of farm products
Sales of value-added products
Membership or loyalty programs

Pricing Fundamentals

When determining how to price for your agritourism activities and experiences, it is important to keep in mind the three C's of pricing – costs, customers, and competition. Just as when setting prices for tangible products, your costs for providing activities and experiences need to be accounted for when setting agritourism prices. These costs include:

Labor, supervision
Products and inputs
Facilities, infrastructure, and maintenance
Taxes and insurance
Marketing
Depreciation

Setting prices doesn't occur in a vacuum, however. Understanding current and potential customers is the second element to pricing. You should understand the motivations and the demand for the activities and experiences you offer. A 2014 study found that the top five motivations for visiting a farm were

view the scenic beauty,
do something with their family,
enjoy the smells and sounds of nature,
learn more about nature, and
have a change from their daily routine (Sotomayor et al., 2014).

The ability to charge more is increased when what you offer aligns with visitor motivation. Trends in agritourism activities and experiences can affect visitor demand for various activities and experiences. For instance, consider the rising popularity of activities such as apple cannons and sunflower mazes, and photographic opportunities.

In addition to understanding visitor motivations, an understanding of their spending habits and willingness to pay for various activities and experiences will also help with determining prices. Databases regarding consumer spending do exist and can be valuable, but accessing this information can be costly. Instead, surveying current and potential visitors about how much they would pay for different activities can be done. Depending on how a survey is conducted you may also gain insight as to visitors' perceived value of an activity or experience.

Competition, of course, plays a role in setting prices as well. Be sure to take the time to analyze the pricing of activities and experiences offered by other agritourism businesses. Look at operations that offer both similar and differing activities as well as businesses in your geographic area and in different parts of the country.

Pricing Strategies and Structures

Agritourism operations that host numerous activities and experiences, particularly during a specified period, such as a fall festival weekend event, may struggle with deciding whether to charge an admission fee or individual activity fees. There are benefits and drawbacks for each strategy, so it is important to consider both the individual event/experience and the full farm operation.

Admission Fee

An admission fee offers visitors the knowledge of exactly what they will spend during their time at your operation (Eckert and Kline, n.d.).This can be vitally important for families with children or for those with limited disposable income. On the other hand, you will then be faced with marketing the value of the admission fee to visitors. They will want to know exactly what they can expect to receive by paying the fee.

Activity Fees

Charging individual activity fees, rather than an admission fee can give visitors a sense of control since they will only pay for activities/experiences that they want to take part in. Two downsides of this pricing approach are that a transaction must occur at each activity (whether cash, credit, or ticket) and numerous transactions can leave visitors feeling "nickeled and dimed" (Eckert and Kline, n.d). Clearly posted and accessible prices are also crucial when charging by individual activity. Consider having signs at each activity showing the fee and having an activity list with prices on your website.

Other Pricing Strategies

There are several other options for pricing that can be used as well. These include:

Membership fee/Season pass
Group pricing
Bundling of activities
Frequent visitor/loyalty rewards
Discounts/Promotions
Online only pricing
Tiered pricing
Adjustable pricing – e.g. higher prices on the weekends or no-school days

Example of an adjustable pricing structure

2024 Season Pricing

Weekdays: $2
Summer Weekends: $5
Early September Weekends (through September 22): $10
Peak Season Weekends: $15
Late October Weekends (October 19 and after): $10
November Weekends: $5

When pricing agritourism activities and experiences incorporate these additional considerations into your decision-making:

Uniqueness of activity/experience. An activity/experience that is not available elsewhere can provide an opportunity for higher pricing.
Business goals. Does the price align with business goals such as providing premium experiences or being a family-friendly destination?

Tools for Determining Prices

The costs for offering agritourism activities, events, or experiences are key in profitable price setting. Enterprise budgets, partial budgets, and breakeven analysis are three tools available for not just calculating costs, but also in assessing profitability at a given price.

Enterprise Budget

An enterprise budget is a valuable tool for tracking the revenue(s) and costs associated with an individual enterprise (e.g. corn, heifers, strawberries). While often associated with crop or livestock production, enterprise budgets can also be developed for agritourism activities, events, and experiences. Enterprise budgets allow you to calculate cost of production, ensure that all costs and revenue streams are accounted for, and simulate different scenarios for an enterprise.

Due to the different revenue and expense categories associated with agritourism, the individual line items in an agritourism enterprise budget will be different, but the fundamentals of enterprise budgeting hold with the components of revenue, variable costs, and fixed costs. For more information about enterprise budgeting refer to the Additional Resources at the end of this article.

Table 1 shows an example of a simplified budget for a sunflower maze. The example is meant to illustrate the enterprise budget format as applied to an agritourism activity and is not intended to be a detailed accounting for a sunflower maze.

Revenues
	Quantity	Fee	Budgeted Amount
Admission Fee	3500	$5.00	$17,500.00
Other
Sunflowers (lbs/acre), 5 acres	1750	$0.40	$ 3,500.00
Total Revenues			$21,000.00

Costs
	Quantity	Cost	Budgeted Amount
Sunflower Production (per acre)	5	$900.00	$4,500.00
Maze design	1	$5,000.00	$5,000.00
Maze Maintenance		$630.00	$ 630.00
Maze Operation
- In-maze signage	10	$50.00	$500.00
- PA Agritourism liability signs	2	$65.00	$130.00
- Wristbands	5000	$0.049	$245.00
- Parking improvements/maintenance		$200.00	$200.00
- Port-a-potty rental	2	$175.00	$175.00
- Hired labor	168	$15.00	$2,520.00
Subtotal - Maze Operation			$9,575.00
Net returns from sunflower maze			$7,925.00
Total Costs			$14,075.00
Total Net Returns			$ 6,925.00

Partial Budget

Partial budgeting may be an appropriate tool if only making a change to an existing activity, event, or experience, for instance adding a weekend to u-pick operations or offering flower bouquet arranging classes in place of goat yoga classes. In a partial budget, you only show the financial impacts – added returns, reduced costs, added costs, and reduced returns – that result from the proposed change.

Table 2 illustrates a hypothetical partial budget for changing a maze from sunflower to sorghum.

Positive Impacts
Added Returns	$
Sorghum revenue	$2000
Item 2	$xxx
Item 3	$xxx
Total added Returns	$2000
Reduced Costs	$
Hired labor	$750
Item 2	$xxx
Item 3	$xxx
Total reduced costs	$750
Total Positive Impacts	$2750

Negative Impacts
Added Costs	$
New signs	$250
Item 2	$xxx
Item 3	$xxx
Total added Costs	$250
Reduced Returns
Sunflower revenue	$3500
Admission fee	$2500
Item 3	$xxx
Total reduced returns	$6000
Total Negative Impacts	$6250

The difference between the "positive impacts" and the "negative impacts" is the net benefit. If the net benefit is positive, the change is profitable. In the example in Table 2, the net benefit is -$3,500, showing that the proposed change would Not be profitable under the given assumptions. For more information about partial budgeting refer to the Additional Resources at the end of this article.

Breakeven Analysis

Assessing the practicality of a proposed price can be done by performing a simplified break-even analysis (Schilling et al., n.d.). The breakeven method will calculate the minimum of sales required for activity or experience using the formula:

BE = TFC / (P – VC),

where TFC = Total Fixed Costs, VC = Variable Costs, and P = Price. The activity or experience would be profitable if you were able to sell more than the break-even (BE) calculated.

Let's look at an example to demonstrate the use of breakeven analysis. Imagine that you are considering offering blueberry pie baking classes, using blueberries that you grow, and you need to determine how many classes you need to offer for the experience to be profitable at a fee of $250 per class.

Total fixed costs

Insurance - $500
Building improvements - $1,500
Supplies (non-food, non-disposable) for the classes - $500

Variable costs

Wages (3 people at $13/hr. for 2 hrs./class) = $78
Pie ingredients (for 11 pies) = $100

Proposed class fee

$25/person, 10 people/class = $250

Using the breakeven formula, we have BE = $2500/ ($250-$178) = 34.72 classes. This means that, with the cost assumptions and proposed class fee, you would need to offer 35 classes before seeing a profit from offering pie-making classes.

You then need to ask yourself whether you could feasibly offer 35 classes during the blueberry season (since you want to use your farm's blueberries). If not, would a higher fee for the class be reasonable and accepted by your target audience? You should also consider what your income goals are and how sensitive the breakeven estimate is to the cost assumptions.

Summary

Profitable pricing requires that you evaluate the pricing of your agritourism activities and experiences regularly. You should not be afraid to adjust prices. This requires that you maintain comprehensive and accurate records. Keys to setting profitable prices include:

Knowing your costs - consider both fixed and variable costs.
Knowing your customers - a willingness to adjust prices based on product characteristics, a specific pricing strategy, customer price sensitivity, customer values, and other factors.
Recognizing opportunities for charging fees for activities and experiences.
Performing a breakeven analysis to know breakeven price or quantity of sales.
Performing sensitivity analyses to understand how changes in sales quantities or changes in price impact profitability.

References

Eckert, J. and D. Kline. (n.d.) Growing Agritourism in Kansas. Revised and reprinted by the Kansas Department of Wildlife, Parks and Tourism.

Hollas, C. R., Chase, L., Conner, D., Dickes, L., Lamie, R. D., Schmidt, C., Singh-Knights, D., et al. (2021). Factors Related to Profitability of Agritourism in the United States: Results from a National Survey of Operators. Sustainability, 13(23), 13334. MDPI AG.

Roth, M. and J. Ochterski. (2016). Getting Started in AGRITOURISM. Cornell Cooperative Extension.

Schilling, B., Chase, L., Komar, S., Marxen, l., Bamka, W., Brzozowski, R., Infante-Casella, M., Melendez, M., Rozier-Rich, S., Sullivan, K., and Wolinksi, L. (n.d.) Financial Management: Budgeting and Pricing for Agritourism. Rutgers Cooperative Extension.

Sotomayor, S., Barbieri, C., Wilhelm Stanis, S., Aguilar, F.X., & Smith, J. (2014). Motivations for recreating on farmlands, private forests, and State or National Parks. Environmental Management, 54(1), 138-150.