a national information resource for value-added agriculture
Agricultural Marketing Resource Center

Pricing

Once you have identified consumers, located a retail outlet and completed test marketing, you need to determine the selling price for your product.  Price is the primary means of generating income and profits for your business.

There are three major factors to consider in setting your price.  The price must cover the cost of producing and marketing your product.  It must be at a price that the buyer is willing to pay for the product.  And the price offered by competitors will influence the price you pick.  Setting your Price will help you through the process of setting a price for your product.

Food Retailers' Pricing and Market Strategies, with Implications for Producers research paper examines grocery retailers' ability to influence prices charged to consumers and paid to suppliers. They discuss the impacts of aspects of retailer behavior on the upstream farm sector.

For more information on this topic, see the links listed below of articles posted on related Web sites.

Setting Prices

  • Pricing Your Product – CCH Business Owner’s Toolkit -- The ideal price for any product or service is one that is acceptable to both buyer and seller.
  • Pricing a Product or Service – Small Business Notes -- Pricing your product or service is one of the most important business decisions you will make.
  • The Right Price for Your Product or Service – Small Business Notes -- In business, few decisions are more crucial than the price you charge for your product or service.  Interestingly, research indicates that many owners of businesses and professional practices underprice their products and services.
  • How to Avoid a Price Increase – HBS Working Knowledge -- Consumers hate price increases, but what is a company to do when material costs skyrocket? One answer: Think small.
  • Packaging and Pricing Your Product – CCH Business Owners Toolkit -- A look at the impact presentation and price on your product's success.
  • Issues Affecting Price – Businessplans.org -- This article addresses a variety of factors that should be considered when establishing a price for your product or service.
  • Product Pricing for Direct Marketers – Direct Marketing and Tourism Handbook, University of Arizona – Do consumers not buy your product because of price, or are there other reasons.
  • Pricing – Ohio State University Extension -- In business it is possible to have the very best product or service and have excellent sales volume, but if the wrong price has been set on the product or the service the business will eventually fail.
  • Methods to Price Your Product – Alberta Agriculture, Food and Rural Development -- The pricing method you select provides direction on how to set your product price.
  • The Essentials of Pricing – Alberta Agriculture, Food and Rural Development -- Setting a price for products is a challenging job for both start-up and established businesses.
  • Pricing your Products: Frequently Asked Questions – Agriculture, Food and Rural Development, Alberta, Canada.
  • Pricing Your Products and Services: A Basic Review – Desmond Wealth Management -- Pricing good and services is one of the most difficult tasks in the business arena.  Many small businesses fail to make a profit simply because they don’t consider all the factors necessary to make prices competitive and yield that elusive profit.

Pricing Strategies

  • Commodity Busters: Be a Price Maker, Not a Price Taker – HBS Working Knowledge -- Too many businesses are price takers, not price makers. That means they are willing to lower prices to capture market share or to sign up a marquee customer.  Don't let your ego get in the way of good business sense. Here are seven steps toward naming your own price.
  • Creating the "Priceless" Product – HBS Working Knowledge -- Fine customer service is no longer enough to differentiate you from your competitors.  Instead, you must build value-adding experiences around your product. The key: Stop thinking about what products do and start thinking about what they offer.
  • How to Fight A Price War: Analyzing the Battleground – HBS Working Knowledge -- Most managers will be involved in a price war at some point in their careers, and it's never too early to prepare. In fact, managers and companies that conduct intelligent analyses of the theater of operations may find they have more options than they think.
  • Is Performance-Based Pricing the Right Price for You? – HBS Working Knowledge -- Not every industry or company can benefit from performance-based pricing. But where there is a fit, PBP can be a powerful tool that merges the interests of buyers and sellers.
  • Price Smarter on the Net – HBS Working Knowledge -- The success of Internet sales lies not in lowering or standardizing e-prices, but in optimizing them.
  • The Price is Right—Or is It? – HBS Working Knowledge -- Is your store set up to reassure consumers that your prices are good value? Here’s how to tell shoppers that the price you want is also the price they want.
  • Use the Psychology of Pricing to Keep Customers Returning - HBS Working Knowledge -- When to charge for a product or service can be more important than how much to charge.   If you want to build long-term loyalty with customers, you better understand the difference.
  • When the Price Slasher Turns Against You – HBS Working Knowledge -- "With prices so low…" goes the sales pitch. Sure, rock-bottom pricing can draw customers into your store, but then what?
  • Your Best Downturn Strategy? Think Twice About Price Cuts – HBS Working Knowledge -- Before you think about slashing prices, think again.  A knee-jerk reaction to the recession is not good for business.
  • Selecting an Appropriate Pricing Strategy - University of Missouri -- The focus of this publication is the selection of an appropriate pricing strategy for value-added agricultural products.
  • Driving Forces of Commoditization – SalesVantage.com -- How do you maintain your price structure and the value of your offering when the trend towards commoditization of products and services keeps growing?

Pricing Specific Products

  • Pricing Horticultural Products – Alberta Agriculture, Food and Rural Development -- What should I charge at my U-pick for strawberries or for my fresh vegetables at the farmers' market?
  • Pricing Processed Food Products – Alberta Agriculture, Food and Rural Development -- To find the right price for your food product, you need to strike a balance between product costs, the attitude of your target customer and the competition.
 

USDA Rural DevelopmentPartially Funded by USDA Rural Development
...and justice for all.

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited bases apply to all programs.) Many materials can be made available in alternative formats for ADA clients. To file a complaint of discrimination, write USDA, Office of Civil Rights, Room 326-W, Whitten Building, 14th and Independence Avenue, SW, Washington, DC 20250-9410 or call 202-720-5964.
 

Iowa State University

The names, words, symbols, and graphics representing Iowa State University are trademarks and copyrights of the university, protected by trademark and copyright laws of the U.S. and other countries.