The Oxymoron of Pricing

For most farmers marketing their products directly to customers, the question of pricing seems simple: the lower the better.

The Farmer Mentality

The farmer mentality is an interesting one. With the nature of commodity pricing farmers are accustomed to selling their products at the market price, that means the lowest price that buyers can get out of farmers. The farmer takes the market price because they have bills to pay. Then next year they think that if they grow more they'll make more money, but the increased production drives the price down and negates the increase in production.

The Pricing Oxymoron

So how does the farmer make a better return? The more they grow the lower the price goes. If they keep production constant they continue to struggle financially. The answer is simple. Sell at a higher price. But how?

Price as an Indicator of Quality

When a farmer starts selling direct to customers, the farmer controls the price. However, the farmer needs to get out of the farmer mentality about price. That means pricing at a point that is profitable for the farmer. Now let me explain how to get customers to pay the price and like doing it.

1)Produce a superior product
2)Believe in your product
3)Price your product where you can make a profit

When people don't have perfect knowledge they often use price as an indication of the quality of the product. This means that if you have a superior product a low price might actually be turning people off. They might question your quality because the price doesn't match the advertised quality. This means that raising the price can actually increase the perception of your product. That means a better price for every product sold and you can actually make money doing what you do best.

Caution

This strategy will take patience. You may run into some resistance, but allow the change to happen.