Monday, January 19, 2015

Why you should charge an outrageous price for your farms production

So I'm going to put a theory out there for you folks to think about.  Here it is:  

Charge an outrageous price for your farms production -- your customers will be happier.  

I know, it seems pretty silly -- how can paying more money make a customer happier, especially when it comes to food.  We live in a culture that has made price the biggest factor that a lot of people choose food by.  

Now I know that everyone here is probably concerned about food quality, more so than most  - and all of you want the animals involved in farming to be treated well at all times, so this isn't a typical audience.  But for most consumers, the choice about their food is mostly about price, and there's a segment of the market... pretty large segment, that considers food that is higher priced to be more satisfying than cheaper food.  Even when it's the same food.  

Seem hard to believe?    Lets take Wine as an example.   There are hundreds of thousands of people who talk at length about wine.  Where it's produced, the production method, the variety of grape, how its crushed... all sorts of stuff. 

but... study after study has shown that the more people pay for wine the more satisfied they are with the wine they purchased.  No matter what the actual qualities of the wine.  'Cheap' wine tastes better when you pay more for it.  

It's a little worse than you think.  I had to laugh at this study that showed that a good number of people actually preferred the taste of dog food vs various pates.   Could it be the expense of the pate makes it tastier, and more satisfying?  I would think so.  Certainly dog food is cheaper -- and since the taste is pretty similar, we can probably save a whole bunch of money at the next cocktail party!

The truth is that wine people really can't tell the difference between wines very well at all, and people are using price as a surrogate for quality.  If it is more expensive, it's better.  

So the next time that you sell something, consider carefully the satisfaction of your customer.  A few more bucks paid might be the difference between just an average chicken and the best chicken they ever ate.  


Bill Gauch said...

That works up to a point. The strange point is that each individual has a specific point. My wife bought a free-range, certified organic chicken at an upscale farmers market one time. She paid the equivalent of $6/lb. It had a huge layer of fat and almost no flavor. She wanted to buy one of the heritage breed chickens ($9/lb.) the following weekend and I said, "No!" The one she bought wasn't any better than a supermarket brand chicken for $.99/lb. It's also the same reason that I've never bought meat from any of the local small farms. They want me to pay $11/lb. for ground beef, and $28/lb. for tenderloin for grass fed (finished on grain) beef. My price point is obviously quite low.

Steve said...

After reading, Think Like a Freak, we decided we are going to invite friends and family over for a blind tasting. With a brother-in-law growing wine grapes we have become used to expensive wine, but my wife says she can't taste the difference. We're going to find out.

We definitely can taste the difference of grass fed beef and small farm raised pork. said...

Good article and an accurate theory I would say.

There are certainly some areas where cost is more of an issue than others. In an area with a larger number of competitive farms, the price will certainly matter to consumers because all of the meat is the same (ie grass fed, organic, heritage, whatever)

I was having a discussion today with another local farmer. We were talking about marketing etc. Very important to me to produce farm products that fill a gap in your local food scene...then, as you point out, you can charge a price that makes you and your family a better living.

Nick in RI said...

Bruce, I've been following the blog for a while and I seem to recall in the past your posting that it's immoral to produce food that isn't affordable.

I think there's a middle ground. A lot of farmers -- not just farmers, small business people in general -- have trouble charging a fair price for their time, effort, talent and expertise. If you do charge a fair price your meat is going to be expensive -- the way any hand-made object is going to be more expensive than a factory-made one.

Some people like to buy hand made things, it makes them happy. Let them.