A guide to pricing your farm produce

Healthy Profit

 

It can be difficult for small scale farmers just beginning to sell produce to know what kind of pricing is reasonable and accurate – especially given that there is not currently any price transparency mechanism available for the public.

A common approach taken is to use online retail (Coles, Woolworths, organic grocers etc) to check current prices, and then adjust for wholesale with a standard mark-up across all. While this is only a very rough guide, it can be a good starting point.

The difficulty with this is that wholesale pricing is based on bulk amounts of products (with fairness to the farmer definitely not the driver!) and as small scale farmers, you definitely cannot and should not attempt to match that. It is important then to check and adjust this based on a bottom-up assessment of costs and break-even.

This is a great resource to help you wrap your head around pricing. This guide provides the building blocks to develop a pricing model, and includes topics such as unique selling point, competition analysis, revision of key costs and calculating break even points.

These fact sheets from Rodale Institute provide a comprehensive break down on how to develop a pricing plan.

This resource from Manchester Veg People in the UK also addresses pricing from page 23. They worked with their farmers to properly calculate fair prices based on costs (see appendix for detail). They then calculated a fair service charge for the food hub based on its costs, and made it transparent to customers.

Some food hubs price their produce by openly discussing with farmers and evaluating this against market prices.

To read more, join the discussion on the Australian Fair Food Forum about determining market prices.