November 2022 - 33

FARM MARKET & AGRITOURISM
Inflation pressure creates pricing conundrum
BRIAN MOYER
Penn State Extension
bfm3@psu.edu
The 2022 season has been a challenge
at so many levels.
Input costs keep shifting, making
pricing your produce difficult when you
are unsure of your actual cost of goods.
You might also be concerned about
changing or raising your prices, knowing
that your customers are very sensitive
to the overall rise of food prices. The
message I've heard from farmers is " I'm
hanging on 'til the end of the season,
then I'll figure out if I made any money. "
Maybe You are in the same boat, but
regardless of what has happened this
season, we need to focus on what we
can control, and what we can control
is pricing. Ideally, price is determined
by the cost of production, but if we
are not sure what our total product
costs will be, cost accounting may not
be the best option.
I know farmers who have been selling
at markets for thirty years and still base
their pricing on what the vendor next
to them is selling produce for. How do
they know where that vendor is getting
their pricing information?
My colleague, Sarah Cornelisse,
has some good articles on pricing.
Sarah talks about pricing objectives
and strategies in this article: https://
extension.psu.edu/understandingpricing-objectives-and-strategiesfor-the-value-added-ag-producer.
Though
the article is aimed at valueadded
producers, the same principles
apply here.
Let's look at some of the pricing
strategies Sarah offers.
Good, Better, Best
This method requires a bit of work
but might be worth it if the customer
feels it has value in some way. Let us
look at sweet corn. A farm market
typically offers sweet corn in bins and
customers select their own ears. They
charge per ear or a half dozen. Not
every customer likes sorting through
bins and may not feel comfortable with
their ability to select nice ears. You
could preselect a half dozen nice ears
and package them, and the customer
can grab and go. You can take this
one step further and husk the half
dozen ears and package them, and the
customer doesn't need to worry about
what they will do with the husks.
Product line pricing and
bundling
This method groups several related or
complimentary products together and is
offered as a package. Gift baskets work
well for this and can be sold for a greater
price as it has a perceived higher value
than the products that would be sold
individually. This method also helps to
move overstock or older products.
Loss leader
Grocery stores do this all the time.
My local store has the smell of rotisserie
chicken wafting from their doors, and
you grab one as soon as you enter, and
they are sold at or below cost because the
customer is going to buy other items to
go with the chicken dinner. The customer
feels they received a good deal and had
the problem of " what's for dinner " solved.
One of the most interesting pricing
strategies I saw at a fruit farm.
Everything they offered was $2 per
pound. The customers grab a bag
when they enter the market or stand.
Doesn't matter what they put in the bag,
because everything is $2 per pound.
There are many other pricing
strategies to consider. Make sure the
one you choose is consistent with your
marketing goals. VGN
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November 2022

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