Wednesday, May 15, 2013

TBF 010 :: Setting Prices, Building Pig Fence, and Gambling With Hay

I mentioned in the previous episode that we had to sit down and take a hard look at product prices a few weeks ago. This was something that I knew we needed to do, but I did not want any thing to do with it for a variety of reasons. First of all, I love doing many things on the farm (even some things that aren't especially fun), but I do not love doing the "business" aspects sometimes. And secondly, I am always worried that people will think my prices are to high and that we will lose all of our customers. The reality is though that the farm is a business and if we are going to run it like a business we need to be continually keeping tabs on our pricing, our inputs, our marketing, and all of that business'y stuff.

With all of that in mind, on today's episode of The Beginning Farmer Show I am going to spend some time talking about how we eventually came around to setting our prices (and recently raising them). There was a lot of thought and research that went into setting those prices, but there are also "pricing values" that we follow when it comes to our product prices. Here are a few of the values that we follow ...
  • We do not want to have high priced products just because some think that we can.
  • We believe that we should receive a decent wage for the work that we do on the farm raising great tasting pork, poultry, lamb, eggs, and beef.
  • There is a defined amount that we feel we need to make in profit for each animal.
  • We will be "price makers" instead of "price takers", but at the same time if our input costs lower for a sustained amount of time we would like to lower our prices to reflect that (as long as we still make our defined amount per animal).
  • Our pricing will be transparent because we are not trying to sneak anything by anyone. Our customers are not just nameless/faceless cogs in a system, they are our friends!
The biggest piece of advice that I can give to anyone though when it comes to setting your prices is to not set them too low! I think the natural tendency for most of us is to undervalue our products because we are fearful of seeming overpriced. The reality is that it costs money to run any business and you must set your prices based on those inputs ... not on what a few people may think! If you do that then you can have a financially sustainable farm.

There is more to this episode though than the big pricing talk (because I do not like only talking about something I don't like). I will also spend some time talking about the latest happenings on Crooked Gap Farm, which this week includes building some new fence through the woods for a pig paddock. Then before the end of the show I share my "Hard Lesson Learned" for the week. This weeks hard lesson has to do with hay and my gamble that the prices would go down over the winter. That was a gamble that cost me big time and I'm already taking action to not let it happen again this year!

The Beginning Farmer ShowAs always, I want to thank you so much for listening and supporting the show with your encouragement and reviews on iTunes! I am continually working to produce a better show, and I'm thankful for all of the listeners sticking with me as I learn. If you do enjoy the show, don't forget that you can subscribe on iTunes and leave a five start rating and review (by clicking the link or the image on the right). If you are an Android phone user you can also subscribe on the free Stitcher App. It is so very encouraging to know that people are listening and enjoying the show!

I would love to hear your questions, show ideas, or comments about the show. Feel free to shoot me an e-mail! As always you can follow along with The Beginning Farmer and Crooked Gap Farm by checking out these links ...

(if you are interested in the music in this episode check out my brother's record label, Historic Records)

1 comment:

Anonymous said...

I hear you about the pricing dilemma. I like your value points. We have learned the hard way over the years to do the math on the expenses, and to include all of them, right down to light bulbs in the brooder. We got burned one year by not double checking the processor's fee before setting our price and preselling all our chicken - and the processor had gone up a buck a bird. I think in parenting they call that kind of lesson "natural consequences". Kind of like your hay story. Expensive lessons though.

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