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

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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?

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PRICING AND REPRESENTING YOUR BRAND

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

Rolex

Timex

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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

©Matson Consulting

WWW.MATSONCONSULT.COM JMATSON@MATSONCONSULT.COM

803-233-7134

“Whatever the market will

bear!!!”