I was talking to a farmer I know the other day, and he mentioned a conversation he'd had with a fellow who raises turkeys. This turkey farmer said that he'd sold around 1,000 turkey poults this year, and was proud of having only lost $300.
Paul, my farmer friend, pointed out that if he'd charged just a dollar more per poult that he would have made $700. That's one of the reasons I like Paul, my farmer friend. He's sharp, and focused on the most sustainable element of small farms -- staying in business. A dollar a bird is the difference between making a small profit and subsidizing other folks dinners.
In my farming, I deal with quite a few immigrants, and most of them come from cultures where haggling is the norm. In fact, if you pay the asking price in their culture, you're almost guaranteed to be disrespected. In fact, in those countries, they'll always have an asking price that is higher than the merchant would expect you to pay, just to have room to haggle. They might quote you 32,000 baht, but they're willing to sell it to you (with appropriate amounts of theatre on both sides) for 8,000.
So I regularly deal with customers who feel like (from their base culture) if they pay my asking price that they're being ripped off. Even if they intellectually know that they're not, emotionally they feel like they're not getting the best deal that they can.
What to do.
I've finally started quoting two prices to people. If I think that they're from a haggling culture, I'll usually quote 30% higher to them, and watch them flinch, and then haggle down to the price that I'll quote to a non-haggling cultural member in the first place. At times the person will agree to pay the haggling price outright, and I'll make up some excuse to bring it down to the regular price -- which is calculated to contain an appropriate amount of profit anyway. I'll say something like "if you'll buy two, I'll give you them at xxx", or "if you'll buy a second one from me later, I'll sell it to you for yyyy". Depends on the customer. If they've taken quite a bit of time, or it's a complicated sale, or on short notice (I MUST HAVE 2 CHICKENS TODAY!!!) I figure that the extra margin is just a "rush fee".
When people start haggling with me, I tell them to take a hike(in a polite way).I know what I need to charge and the price is the price.If you produce a good product and the customer knows it then they will pay what you want.
ReplyDeleteInteresting approach Bruce.
ReplyDeleteI hate haggling, probably because I wasn't raised in a culture that normally haggles. I usually sell animals at a fixed price, but I have haggled. One family who was regularly buying roosters from me. They wanted to buy some young broilers from me. I really didn't want to sell them so I priced them a bit on the high side and we haggled down to a price I thought was fair. They got a fairly good deal on birds they'd only have to hold for a month or so before slaughter, and while I didn't make as much of a profit as I would have selling adult birds, I also didn't have to feed them, or butcher them. A win win as far as I'm concerned.
http://en.wikipedia.org/wiki/Boulwarism
ReplyDeleteThat's what I do. It works. You are probably are the best option for your customers. You are better off to train them and save you and them a lot of time.
This sounds like a well thought out pricing plan. I can see why your farm has become so successful and profitable.
ReplyDeleteThe most interesting you said in this post was the part about a profit being the most sustainable part of a farm. Growing up in an agricultural community I remember a time when it seemed that all of the farmers new how to make a buck and while they never poor mouthed the most a farmer would say about a really good year was that season wasn't "too bad". In fact the only pepole with a pencil sharper than the farmer might be the tax accountant, but that's debatable.
ReplyDeleteI heard of someone who would start to raise the price if the customer started to haggle with them. It got the point across!
ReplyDeleteI like your approach as well.
Funny but I sell to plenty of ethinics and virtually no haggling. They ask the price and pay it. The occasinl person who won't I send elsewhere. Ive got other customers.
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