Black Friday has me thinking...
If you decide that you want to lower your selling price, you need to get something substantial for that. Lower prices should only be a reward for the customer who helps you drive down your acquisition costs, increase your utilization, or sell a lot more product.
CSA farmers often provide a discount for early purchases, and I've seen this more and more with the "market CSA" model where customers get a punch card to shop at a farmers market stand. Before you do this, you have to ask: does getting money up front reduce my overall expenses? Can I "borrow" the money from my customers for less than I could borrow it from the bank?
In that same model, you would also want to ask if providing a discount at your stand helps you to make better use of your fields or your product selection? One of the curses and advantages of farming for a CSA is the requirement to grow a lot of different crops - it's hard, but it also means you have the opportunity to get increased value on low-value crops by including them in the same box; for example, we used to include greenhouse greens in a box of winter roots, effectively increasing the value of the turnips by packaging them with the fresh greens.
Finally, does providing a punch card help you sell more product - and does it help you sell enough more product to offset the lost profits from the discounted produce? If you are making a 30% margin on your crops, and you give your customers a 10% discount, you are cutting your profits by a third.
The same questions apply to dropping prices in any situation. Does decreasing your price allow you to sell a lot more product - like moving pallets of broccoli to a wholesale distributor? Does it drive down your costs - like saving the time and expense of going to farmers market? Does it get you needed cash flow to pay staff until you get to a more profitable crop? (Are you sure?) Does it help you put together a load that includes high-margin crops?
Never lower your prices for the sole purpose of selling products - sales without profit is just work.
If you decide that you want to lower your selling price, you need to get something substantial for that. Lower prices should only be a reward for the customer who helps you drive down your acquisition costs, increase your utilization, or sell a lot more product.
CSA farmers often provide a discount for early purchases, and I've seen this more and more with the "market CSA" model where customers get a punch card to shop at a farmers market stand. Before you do this, you have to ask: does getting money up front reduce my overall expenses? Can I "borrow" the money from my customers for less than I could borrow it from the bank?
In that same model, you would also want to ask if providing a discount at your stand helps you to make better use of your fields or your product selection? One of the curses and advantages of farming for a CSA is the requirement to grow a lot of different crops - it's hard, but it also means you have the opportunity to get increased value on low-value crops by including them in the same box; for example, we used to include greenhouse greens in a box of winter roots, effectively increasing the value of the turnips by packaging them with the fresh greens.
Finally, does providing a punch card help you sell more product - and does it help you sell enough more product to offset the lost profits from the discounted produce? If you are making a 30% margin on your crops, and you give your customers a 10% discount, you are cutting your profits by a third.
The same questions apply to dropping prices in any situation. Does decreasing your price allow you to sell a lot more product - like moving pallets of broccoli to a wholesale distributor? Does it drive down your costs - like saving the time and expense of going to farmers market? Does it get you needed cash flow to pay staff until you get to a more profitable crop? (Are you sure?) Does it help you put together a load that includes high-margin crops?
Never lower your prices for the sole purpose of selling products - sales without profit is just work.
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