With the current increase in general prices of items: goods, products and services, its easy to think that the best way to keep a place in the market is to follow the trend and increase prices of your produce or products.
I fell into
the temptation of believing that the best and easiest way to get money back quickly was to mark up prices of my products across board from fresh mushrooms to all the other related products by 12.5% as per my production target and cost. Although armchair reasoning suggested it was the best thing to do, I learned quite swiftly that my decision wasn’t a smart one after all.
A closer look at my rate of product flow from store to sale revealed that sales and marketing had drastically slowed down over a 3-month period since my earlier decision.
For example a product that got sold off the shelf averagely within a week now stayed two times longer which obviously meant reduction in overall quantities sold and revenue.
…then I began to ask questions and dig deeper; that’s when I found out there’s more to it than meets the eye.
Here’s the thing: there are a lot of myths out there about food prices and pricing, and a lot of propaganda supporting actions that are rarely understood. It’s like your mother used to say: just because everyone is jumping off a bridge doesn’t mean you should do it too!
Using an Economist’s Spectacles…
If you’ve been keenly observing how products and or services fare in a typical market with respect to fluctuations in price, income levels etc.
Or if you’ve ever thought why bad harvests seem to raise farmers’ revenues while good harvests lead to a general collapse in agricultural prices,
And if you’ve ever asked what should determine how you price products/ produce from your farm, then you have been thinking like an economist.
But what really happens —the inside story?
The nature of a product or commodity and the behavior of consumers as well as other external market interventions all play a role when it comes to costs, sales, revenue and everything else in between. Actually their role play begins at production…… Every farm owner needs to calculate cost of production on the farm in order to set accurate prices and production targets.
This information is needed to identify the most appropriate buyers (either direct or wholesale) for your products. When there are increases in price of food and other commodities, the standard of living falls; this is because though the normal budget a family would have lived on doesn’t change, the prices of goods and services they consume is now double or in some cases tripled such that the quantities of goods (food, products, services) previously consumed will now have to either be reduced, substituted or even sometimes completely crossed out from the spending list to stay within income sources available.
In summary: the rising cost of food may be as a result of two things: increased demand relative to supply (scarcity), or inflation (defined in terms of the decrease in purchasing power of the Cedi).
A Hard Lesson Learned!
Naturally after making a mistake, you look out for opportunities to turn them around or at least hope that you can take an action that remedies the situation.
In my case, since I couldn’t possibly go back to revert prices, I had to look out for more market outlets where I varied prices so that across different segments of consumers, I could get a lot more sold than just concentrating on a few.
It wasn’t fun and didn’t sound very inspiring in the beginning but from where I stand now at the end of the tunnel, I can at least see some light and hope that with time, consumers will adjust their spending patterns more in the direction of opting for healthier substitutes; which will mean more sales and an eventual raise in revenue.
The Good News Is….
More and more, people are shelling out their hard-earned cash for what they believe are the best foods available. Imagine, people say: you can improve your nutrition while helping save the planet from the evils of inhumane and unhealthy agriculture – a complete win-win. And who wouldn’t buy naturally produced farm stuff, when it just sounds so good?
This portion is in two parts. In the first part I discuss my observations and general knowledge I have gathered on food pricing and speculate about what informs the average customers’ choice for a service or product. (If you’re the kind who doesn’t like theories and trust things will certainly get better with time, skip to part two.) Is everyone still with me? Yep. Thought so. In the second part, I want to offer a couple of tips you can use to boost your sales numbers – whether you sell produce, jam, or salsa.
Never price your product according to general price fluctuations unless you are sure your produce or product is a necessity or at least forms part of a staple diet so that in this case a change (increase) in price doesn’t reduce patronage. E.g. Cereals, dairy, ‘everyday’ veggies etc. It is assumed that eating habits are slow to change hence price changes in these commodities have a negligible effect on demand and consumption.
Also, if your product, produce has a lot of equally good substitutes on the market it may not be smart to juggle prices otherwise you’ll get
punished by the typical consumer who obviously prefers more to less!
- Group Products Together to Make a Deal
Simply giving your customers a deal on buying more than one item is a way to increase your top line. Let’s say you sell jam for 6$. Making the deal one for 6$ or 2 for 10$ seems like a great deal – and it is. This increases your average transaction size because customers have an incentive to buy more than one jar – it’s only 4$ more! This works the same way with gift packs, too.
- Acknowledge Every Customer
When you let a customer walk by or quickly grab a sample and dash, it’s a lost sale. Say hello, even if you think “they aren’t your customer”. Often times, this simple engagement increases trust and credibility. You may find yourself in a long conversation, but at least they’re more likely to buy because you’ve engaged them.
- Make Your Booth Inviting
Customers love beautiful product displays. It’s what sells your product. Make sure everything is clean and presentable. After all, customers are coming in to “your store.” They expect clean shelves, attractive displays, and easy to read signage, so they can get what they need and move to the next activity.
- Help Customers Picture or Imagine Using Your Product
Recipe sheets are essential for increased sales. I often get the question “how do I prepare my mushroom or in what ways can I use it apart from the traditional soups or stews?” all the time. Having an answer with something the customer can take away for free is powerful. Let your customers know what you enjoy your products with or on – paint a picture for them so they can see themselves doing it. For example, “Our fresh oyster mushrooms sautéed is amazing on toasted bread. Get some nice thick sliced wheat bread from another vendor, and you’ve got the best sandwich you’ve ever tasted.” See? You’re hungry now aren’t you?
- Affiliate with Other Vendors
If you sell condiments or sauces – or even produce – think about how you can work with other vendors. Here are a couple ideas: cross-promote your barbeque sauce with a meat vendor, find the ice cream guy and feature your granola as a topping, or if you use a certain farm’s peppers in your hot sauce, let your customers know.
Well, there are tons of opportunities to make your market booth bring in the big bucks and at the same time help your consumer to keep their food budget manageable. I hope you’ll practice some of what has been shared to see what works for you. How about you? what tips or tricks have you used to grow your food business? On the other hand if you’re a consumer, what inexpensive ways (choices, decisions) have you tried to stay within budget while still meeting your family’s needs?
Please post your own ideas or experiences below. I am always looking for new ideas.0