#118: Free Worksheets to Figure Out How to Price Your Products

Get the Free Pricing Worksheets HERE.

Last week on a free marketing call I hosted, I was asked a question I’m super-opinionated about.

A farmer asked if it was a good idea to do a blog post, email, or even Facebook/IG post to her customers explaining how she came to pricing her meat chickens she sells.

My instant response – the short answer — is a big fat “NO!”

You do not deserve the conflict or criticism that would arise out of this practice!!

I have seen farmers attempt to publicly explain the pricing behind their raw milk, eggs, meat prices, and more, in an effort to educate and explain or defend why their food might be more expensive than in a grocery store.  Then I watch as these well-meaning business owners are torn apart, criticized, and called names online by non-farmers AND even by other farmers.

Trust me, NO ONE is able to understand your pricing if they aren’t in your business. They do not understand your particulars. And explaining or breaking down your prices often comes across as defensive because you’re coming from a place of trying to prove or justify or defend – why you charge what you charge.

When you learn to come from a place of self-confidence or even courage, you won’t need to prove or justify your pricing and life feel so much easier.

Just think about our own shopping experiences.

When I go to my local Farm Store to buy a new Carhart jacket or Muck Boots, not only would I not ask them what are the costs involved in producing this jacket so I know if their price is fair, I really don’t even want to know. I’m not interested. I’ve got my own things to worry about and I trust that they’re doing what they have to do to stay in business.

I don’t want to know that the fabric cost $2.30 and the zipper was forty-three cents and the person running the machine was paid $5 per day and then there’s the few cents it cost to be on a big boat from Cambodia. Then, it was trucked to Wilco where an employee unpacked it and hung it up, costing a few more cents.

So the costs, including wages, are $10 or so.  And the price tag says $89.99.  I don’t want that explanation that will then cause me some stress wondering who gets the other $70 bucks.  I have way too many other stressful things to think about, such as how to fix the fence that had trees fall across it in 8 different places in the ice storm, and how to fill my next year’s hog orders when our breeder when out of business, and the stress of a freezer that keeps breaking down but we can’t get a new one for 6 months.

But stress aside, some farmers feel they owe it to their customers to explain their pricing.  No way, never, please don’t do this!!

IF you feel like you are obligated to do it, it always comes from a negative emotion – guilt, obligation, fear, anxiety, lack & scarcity are all feelings I help people uncover that drives them to want to justify or prove their price.

It comes from these emotions, or “not good enough” unworthy, so many negative feelings will drive you to want to explain your pricing.

You can discover what negative emotion is making you feel the urge, or obligated, to explain your prices by just asking yourself – I want to explain my pricing because I’m feeling what emotion? How do I feel right now that makes me want to explain my pricing?

Guaranteed it’s one form or another of the emotions listed above.

This means, when your customers hear the explanation from these negative emotions you’re feeling, it now comes across through the message and they feel doubt about your pricing. That’s why people go elsewhere – not because the price was increased, but because of the emotion you were feeling when you explained it.

NOW, why do you need to increase your prices? Well, it’s pretty common in the direct-to-consumer farm world that you’re not charging enough to be sustainable and profitable.

I’ve spent the last 13 years watching farmer after farmer get into business and then go out of business after 1 year, 2 years, maybe 4 at the most.  Hardly anyone I knew farming even 6 years ago is still in business.  Farming on the small scale that is so much healthier for the land and animals is a very deep money-pit that you will continually dump your heart and dollars into, also paying an emotional and physical price, and hopefully make a go of it for longer than your neighbor.

 So, no matter how much you’re charging, I know from experience you are likely not charging nearly enough to be sustainable.

But your customers who aren’t farmers will not get that.  Even if they own a few chickens, they still won’t get it.

The only time I discuss the breakdown of my costs is in a consulting meeting with other farmers who are in business or planning on getting into farming and need realistic info.

One thing farmers often forget to put into their cost breakdown, and that the public has the most problem with is a wage – a living wage here in NW Oregon within an hour or so of Portland is about $22 per hour. Most farmers tell me they are averaging LESS than minimum wage and are ok with that.

Until they get tired of living unnecessarily in poverty.  Then they call me to let me know they’re going out of business because their family life is suffering due to all the hours – and money they’re pumping in from their day job into their business and they can’t hire anyone because they did not figure a living wage into their pricing.

I hear from farm owners and laborers who are on food stamps and other forms of public assistance.  They’ve taught their customers to expect food so cheap that the farmer lives in poverty!

Be sure to get my free cost worksheets because they’ll help you remember to include a lot of things farmers forget. Most farmers forget to include things like farm vehicle payments, mortgage payments (or rent), taxes, insurances, and total loss of crops or animal replacement.  Or fencing and replacement fencing!  (and so many more unseen costs). I have a pretty exhaustive list of things to consider in those pricing worksheets.

Even if you get your land for free or very low rent because of a generous family or neighbor, in my life experience with lots of farm stories, this won’t last for long, or forever – so if you have not budgeted for rent/mortgage, then when the person gifting you the property decides to sell or charge you, then you’ll not be prepared to go out and rent land.

I get those phone calls all the time – that someone has decided they need to charge or sell their land and now the farmer calls me desperate to find more free land – because they didn’t price their product in a way to afford the actual costs of raising their products.

Total crop loss and animal death is another big money pit – you must account for these things in your pricing.  New farmers often lose their crops due to inexperience.  And I hear all the time from small dairy operators that one of their milk cows died.  Again, this inexperience must be accounted for in product pricing.

But if you list that out – a line item for a replacement milk cow for instance – or my recent coaching client who lost 30% of her crop over a hard winter and now realizes she needs to budget for that each year, if you list that out – customers will question you as to why you need to do this.  Non-farmers, and even new farmers, have a hard time understanding that it is a very common occurrence.  Customers pay for the crop they do eat but also they must pay for the losses and all the things to sustain the product, or you won’t stay in business!

One farmer I knew spent his first year feeding hundreds of meat chickens.  But because he was inexperienced, and he was buying feed from a newer feed producer, the protein balance was off and all the chickens tasted like fish.  He made lots of refunds and is out of the chicken business.  You must build your learning curve errors and the high costs of farming into your products.

Another item small business owners often fail to consider is wear and tear on property.  When I have 30 people a day drive into the driveway to our farm store, this means a lot of maintenance dollars are spent on the driveway and the parking area, regularly, and that must be built into the cost of the product.

But try explaining that to customers who don’t have people using their property every day and they’ll think you just need to absorb that cost.

Taxes and insurance are a big expense a lot of small business owners leave out of the cost of their product. Maybe because they started out their business and had friends or volunteers helping out and had so many losses that taxes weren’t an issue.  But that is not sustainable – once you have employees and in order to stay in business you’ll need to get there – you must pay worker’s comp and social security and Medicare and others, so taxes and insurance must be figured into the cost of the product from the start.

I have several different insurance policies on my farm – a general farm liability policy, a raw milk liability policy, a meat liability policy, coverage for my hay in the barn, coverage on 4 barns + other outbuildings, and another policy for running a business in my home.  And I’m sure I’m missing some!!! And because of the touchy nature of raw milk or other small-farm products, the different insurances often can’t all be rolled into one.

This adds up to lots of $$ spent on insurance.  But 3 neighboring farms had barn fires in the last 6 months.  At least one that I know personally had no insurance coverage on their hay and lost their winter’s worth of hay.  They can’t afford to replace it so are just closing up shop.  So if you figure insurance is too much to pay upfront, you need to think again – lack of coverage will do you in. Your prices must reflect this.

If you have a problem with your customers wanting to know the cost breakdown (mine NEVER ask) then you just haven’t stepped into your CEO role fully. A CEO will not explain things their customers can’t understand because that would always be from a place of doubting your products’ value. A CEO  –  which you learn how to be fully and completely in 5x your farm sales – knows how to manage for doubt that comes up and does NOT make decisions from that place.

Remember, 5X Your Farm Sales, opens up again in August and when you implement the program, you will build the confidence to charge the prices you need to charge, even if at first you think they are so high no one will pay them.  The advanced marketing strategies combine with mindset coaching will also teach you how to build such a deep relationship of trust with your customers that they would not dream of questioning your prices and will gladly pay what you need to support your farm.

Be sure to get my free price for profit worksheets HERE and figure out what you need to be charging, then get the coaching on your mindset to increase your prices from a place of self-confidence and feeling empowered and like you’re serving people.

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Hi, I'm Charlotte Smith!

I’ve made it my career to give farmers the mindset and the marketing strategy they need to have a farm and life they love.

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