The Challenge

Finding the right price for farm products can feel like a burden. Pricing makes most people think about money, and privilege and whether we and the people we love have enough of it. It brings up a lot of emotions, perhaps a lot of shame. On one hand farm products are like all products, they require material inputs and efforts (a $ cost) to create a product to bring to the marketplace. On the other hand the product you are creating is FOOD, which is something essential for all living beings and a human right.

And on the left foot you have another issue entirely which has been brought up recently during a time of high inflation. As we see the cost of all materials and products rising, many farmers have been having the conversation about raising their prices online. These farmers are bringing up the fact that most American consumers are not paying the true cost of their food. Thanks to things like subsidies, unfair wages paid to skilled laborers (farmers), lack of healthcare paid to those laborers (the farmers) and the like- we are afloat on a food system whose “price to the customer’ doesn’t reflect the true cost of growing that product. It’s a bigger issue, and my point is to say that when a small, local farmer, who is trying to grow food ethically and create a livelihood for themselves and their employees, all these ideas come into play. Its emotional and mind boggling. We wonder if our prices will drive customers away? Will our prices bring customers in? Will it cover my costs? Will I make a profit from it?

Acknowledge and set aside the emotion for a moment

It can be mind boggling. So, to some degree I try to strip away most of that emotion and the external focus when I am figuring out what price to charge for my products. I try to start with what I need to cover my costs, and then add in what I need to support the farmer (so far that’s just me).

I have utilized a tool called the Veggie Compass to figure out my overhead cost as well as my cost for each crop , or similar crop type. This is a great tool. If used properly it can tell you if you are pricing for profit or losing money. It’s SO easy to lose money farming.

I think its supremely important to start with your financial needs, and your specific farm’s costs before you get caught up in comparisons.

When you take a look at your costs of production it is likely that labor will be your highest expense. With that I like to estimate the current cost to hire someone to do that work at the going fair rate, or take the average wage of the workers involved in producing that product. If you aren’t paying yourself or others fair wages currently, it may be better to plug in an aspirational hourly wage rather than your current one. That way you are pricing yourself to support your higher goals instead of mistakenly pricing a product based on your own willingness to work long hours for free. Although many farmers make sacrifices for the sake of their businesses, it’s not smart to ‘bank’ on free labor or underpaid labor.

comparing apples to apples

I have included a document with useful pricing comparison charts for those who are struggling and need a point of reference. The document lists different price lists that are relevant to local-direct marketed produce and meats.

I have included this because, at some point you may want to look at what comparable products are being sold for in your area. It’s important to keep in mind that comparable is key. Grocery store pricing might be educational but it often isn’t a truly comparable product, and it is not likely to be enough to meet your needs- but might be!

So ask yourself if you are comparing apples with apples?

Or

Are you comparing apples trucked from Washington state, sprayed with pesticides, grown by unfairly compensated workers, and stored in a cooler for 9 months before being sold in a grocery chain in Virginia to Apples grown on heritage trees using organic practices that contribute to soil health and create living wage earning positions directly in the community that they are sold into only 2 days after being picked? The value of each is vastly different. So use caution when looking at other’s prices.

This is the case even within your market. Sure there may be other farmers in your market charging less than you for a product, but its not safe to assume that they have accounted for their costs or are making any cash to take home.

Additional Costs to Factor In

Some extra charges that are important to consider as you set your prices.

• Is sales tax included or added on?

• How much is deducted when the customer pays with a credit card?

• What % of sales will I owe to the Farmers Market Organization

• Did I factor in packaging into my costs?

  Each of this will cut into your profit margin if not considered in advance.

Hopefully these tips and the resource sheet can help you feel confident in your pricing strategy and help find a starting point for going to market with the ‘right’ price for you!