pricing your product: setting the sale price

PRICING YOUR PRODUCT:SETTING THE SALE PRICE

October 18, 2012 – Local Foods Network

James MatsonAgribusiness/Marketing Consultant

October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting

JAMES MATSON

Owner and Senior Consultant for Matson Consulting25 years of experience.

Assisting thousands of business projects. Conducting at least 125 agricultural feasibility studies.Generated over $25 million in awarded federal grants. Conducted 100’s of workshops and public speaking

engagements throughout the US & internationally.

Help Develop numerous business development centers.Authored numerous works for scholarly, industrial, and

popular publications, including USDA SR-58 “Cooperative Feasibility Study Guide”.


PRICING YOUR PRODUCT

• Developing a pricing strategy can be a long drawn out affair. • We can even skip lunch to learn about all the processes.

•Or…


WHAT IS FAIR PRICING?

We can determine what is fair pricing.

What is fair pricing?

Whatever the market will bear.

©Matson Consulting

THE END!


SORRY NOT YET…

• Sorry, there is a bit more to fair pricing than that.

• But don’t forget.

• “Whatever the market will BEAR!”


WHAT IS FAIR PRICING?

•So, how do we determine how much the market can BARE?


PRICING STRATEGIES

• Multiple pricing strategies can be employed to find the right price for your goods.

• Here are some examples.


PRICING STRATEGIES

• $0.50 to grow

• $0.25 to sell

Contribution Pricing is

determining how much it

costs to bring the good to market then

adding a margin.

$0.75 + Margin


PRICING STRATEGIES

Penetration Pricing offers a low price to get exposure and gain wide acceptance quickly.


PRICING STRATEGIES

Skimming The Market is to introduce the product at a high price for affluent customers only.

It causes low volume and high margins which can effect your company in negative ways.


PRICING STRATEGIES

Psychological Prices are emotionally satisfying to the customer.

It is most efficient when you are selling directly to the consumer.


PRICING STRATEGIES

•Competitive Pricing is to find out what competitors are selling at, then match or undercut.

Credit: http://mytechandspace.blogspot.com/


PRICING STRATEGIES

•Differentiated Pricing is to take different prices for the same product in different situations.


DIAMOND WATER PARADOX

Water Diamonds


PRICING STRATEGIES

Airline Pricing Model

One Seat $59

Another Seat

$2559


PRICE-TAKING VS PRICE-MAKING

•A price-taker is an individual or firm who is not influential enough to affect the price of an item.

•A price-maker is an individual or company which is influential enough to affect the price of an item.


PRICE-TAKING VS. PRICE-MAKING

•We should always strive to be price-makers.

• To do this we need to make our products unique.

• This is done by making substitutes hard to find for customers.


WHAT MAKES THESE APPLES DIFFERENT?


PRICING AND REPRESENTING YOUR BRAND

•Pricing can be the best representation of your brand in the marketplace.

Rolex

Timex


FAIR PRICING CONCLUSIONS

•Finding the right price is about maximizing revenue.

•Common sense is the always the best solution to pricing your products.

©Matson Consulting

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October 18, 2012 – Local Foods Network Work Shop