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Author Topic: Some Sobering Figures  (Read 1516 times)

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Offline Little Feather

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Some Sobering Figures
« Reply #1 on: July 16, 2012, 04:55:50 AM »
Some Sobering Figures
 By Herman Beck-Chenoweth
 
 Farmers and are hard workers, but nobody likes to work for nothing. Unfortunately, farmers are notorious for underpricing their products.  It is important to know your costs and your competition, but when it comes to setting prices many people forget that the lower your prices are the more work you need to do to make the same amount of money. This is particularly true when you are processing the items you sell. I am not saying don't ever lower your prices as there are other factors to take in to consideration.
 
 Several years ago Walter Carpenter, an Extension Agent for New York State, put together the accompanying chart that shows the effect of raising or lowering your prices. You can quickly see, the amount of work you will have to do is very dependent on the price you charge: There are many factors you must take into account, of course, when you set your prices:  What is your competition charging for similar products?  What is the demand for your particular product and your production costs, just to name a few. But, stop and think.
 
 What Actually Happens When You Raise or Lower Your Prices?
 
 A 3% price cut means you must sell 13.6% more volume to make the same amount of money
 A 5% price cut means you must sell 25% more volume to make the same amount of money
 A 10% price cut means you must sell 67% more volume to make the same amount of money
 A 15% price cut means you must sell 150% more volume to make the same amount of money
 A 20% price cut means you must sell 400% more volume to make the same amount of money
 
 On the Other Hand...
 
 A 3% price boost equals the same amount of profit on 90% of sales volume
 A 5% price boost equals the same amount of profit on 83.5% of sales volume
 A 10% price boost equals the same amount of profit on 71.5% of sales volume
 A 15% price boost equals the same amount of profit on 62.5% of sales volume
 A 20% price boost equals the same amount of profit on 55.5% of sales volume
 
 
 Lets say you are raising and processing poultry. If you reduce your prices just 10% that decision will force you to raise and process 700 additional chickens over the 1000 you raised before just to make the same amount of money. Unless you need the additional manure and fertility for your farm doesn't it seem like a better idea to raise your prices by 10 and only have to produce 715 chickens instead? Even if you are not particularly fond of marketing it seems like a good idea to work a little harder on marketing and save yourself the extra processing and production time.
 
 But again, if you need all that extra manure ( and the exercise you get shoveling it) perhaps cutting your price will even save you money over the cost of buying in fertility.
 
 You can find many good books on marketing all types of farm products at www.Back40Books.com on the web. From the side index click Agriculture/Farming, then Marketing, and you will find 19 books on how to increase your sales and profits. If you are reading this on the web, click here to go directly to the Direct Marketing book listing:  http://www.back40books.com/d/1011/direct-marketing.htm
 
 Herman Beck-Chenoweth is the Director of the Resilience Research Farm located near Hartshorn Missouri 65479. For more information on Resilience go to www.Resilienceonline.org    Copyright 2012 Resilience Research Farm
 
 

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 Direct Marketing Farm Products, Setting Farm Prices, Marketing farm produce, marketing farm products, free-range poultry processings, selling free-range poultry. marketing chickens, retail farm sales, farmers market pricing, Herman Beck-Chenoweth, Resilience, Resilience Research Farm, Back40Books.com

« Last Edit: July 16, 2012, 06:08:18 AM by Little Feather »