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”.
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
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…
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
WHAT IS FAIR PRICING?
We can determine what is fair pricing.
What is fair pricing?
Whatever the market will bear.
©Matson Consulting
THE END!
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
SORRY NOT YET…
• Sorry, there is a bit more to fair pricing than that.
• But don’t forget.
• “Whatever the market will BEAR!”
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
WHAT IS FAIR PRICING?
•So, how do we determine how much the market can BARE?
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
PRICING STRATEGIES
• Multiple pricing strategies can be employed to find the right price for your goods.
• Here are some examples.
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
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
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
PRICING STRATEGIES
Penetration Pricing offers a low price to get exposure and gain wide acceptance quickly.
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
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.
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
PRICING STRATEGIES
Psychological Prices are emotionally satisfying to the customer.
It is most efficient when you are selling directly to the consumer.
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
PRICING STRATEGIES
•Competitive Pricing is to find out what competitors are selling at, then match or undercut.
Credit: http://mytechandspace.blogspot.com/
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
PRICING STRATEGIES
•Differentiated Pricing is to take different prices for the same product in different situations.
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
DIAMOND WATER PARADOX
Water Diamonds
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
PRICING STRATEGIES
Airline Pricing Model
One Seat $59
Another Seat
$2559
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
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.
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
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.
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
WHAT MAKES THESE APPLES DIFFERENT?
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
PRICING AND REPRESENTING YOUR BRAND
•Pricing can be the best representation of your brand in the marketplace.
Rolex
Timex
October 18, 2012 – Local Foods Network Work Shop ©Matson Consulting
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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“Whatever the market will
bear!!!”