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Managing your business financials Pricing Entrepreneur Workshop #3

Managing your business financials Pricing Entrepreneur Workshop #3 Information adapted from: Market ready , product of the university of KentucKY. Pricing 101.

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Managing your business financials Pricing Entrepreneur Workshop #3

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  1. Managing your business financials Pricing Entrepreneur Workshop #3 Information adapted from: Market ready, product of the university of KentucKY

  2. Pricing 101 The major mistake producers making in pricing to restaurants is to assume retail prices (ie: grocery or farmers’ market) prices will be comparable when selling to restaurants Restaurants are a wholesale market – most will not pay farmers’ market prices Most chefs will tell you what they’re looking at for non-local prices

  3. Pricing Account for the cost of transportation – ie: getting your product to the end-market “We see what the product is selling for wholesale, figure in fuel costs and our time, and that’s what we stick with.” --Brian Stout, Dowagiac MI, Green City Market, Chicago IL

  4. Pricing Have some understanding of what price your product can command – don’t rely on the buyer for all your market information Have open communication with the buyer about price, particularly when working with restaurateurs “With pricing, the relationship is not a one time thing – that’s what needs to be understood. If you’re willing to sell me tomoatoes at half or three-quarters of farmers’ market price, or whatever we agree to, I will buy tomatoes from you week in and week out for as long as your tomatoes are going to be in.” -Neal Gilder, Arbor Ridge Vine & Grill, Crestwood, KY

  5. Pricing Quality of the long term relationship is about delivering value to the end-market Be careful not to price yourself out of the market “I can’t afford to serve an $8-$10 ‘salad’. It won’t sell.” Keep in mind why an end-market would continue to keep you as a “preferred supplier.”

  6. Pricing • Understand that quality and availability can greatly affect the price paid • Higher quality may justify higher prices • Large quantities may create a situation for discount pricing – but offering discount prices can allow you to move more product than normal in less time • Know approximate production costs including inputs and labor

  7. Published Price List • Using a published price list for chefs and smaller-scale buyers • Consider developing a weekly price list • Describe the product on the weekly price list, too! • See your product online • Have a platform for electronic ordering, email/PayPal/Azoti? • Use an easy order form template • End Markets want to see clear, fair pricing, and reference prices

  8. Pricing Resources A General Guide on Pricing… Bruch & Ernst, PB1803 June 2011 https://utextension.tennessee.edu/publications/Documents/PB1803.pdf Auction and Farm Market Prices, weekly www.uky.edu/Ag/NewCrops/price.html Wholesale Terminal Produce Prices, daily www.marketnews.usda.gov/portal.fv

  9. Best Pricing Practices I know I may not be able to charge a full “farmers’ market” price when selling direct to restaurants or foodservice customers I estimated my costs of producing the products I will be offering to buyers I estimated the cost of delivering the product to the end-market I have researched prices buyers in my area may be paying for wholesale and farmers’ market prodcuts I understand why the buyer might value my product more than wholesale products, and have discussed the benefits of my product’s quality, freshness, or locally-grown attributes with them. I am prepared to quote a price per pound/other unit that I would accept for my product.

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